Categorized | News Release

Tax Facts: Estimated Taxes Who Needs To Pay Them?

Courtesy of Tom Ploskanka C.P.A.

taxesInterest, dividends, rents, royalties, and business receipts. What do all these types of income have in common? The answer: Typically, no federal income tax is withheld from any of them. That means you may be required to make estimated tax payments.

To determine if you have to pay estimates, you’ll need three numbers: the amount of tax you expect to owe for 2015, the amount of tax you’ll pay via withholding or credits for 2015, and the tax shown on your 2014 return.

Generally, if you expect to owe $1,000 or more for 2015 after subtracting your withholding and credits, you could be subject to underpayment penalties. However, if you have prepaid 90% of your 2015 tax liability or 100% of your 2014 tax liability, you will not be penalized. Special rules apply when your income is greater than $150,000, or if you’re in the business of farming or fishing.

You can compute your 2015 estimated tax using the worksheet in the Form 1040-ES package. The package also contains the forms you’ll file if you plan to pay the estimated tax by check or money order. The payments are generally due in four equal installments. The due dates are April 15, June 15, September 15, and the following January 15.

Be aware that changes in your personal financial situation can affect the amount of estimated tax you’re required to pay. Remember, penalties can apply if you underpay.

Give us a call if you need assistance in calculating your estimated tax liability.

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