Some taxpayers earn income not subject to withholding. For small
business owners and self-employed people this can mean making quarterly
estimated tax payments.
Anyone in this situation should check their withholding using the “Tax
Withholding Estimator” on IRS.gov. If the estimator suggests a change,
the taxpayer can “submit a new Form W-4” to their employer.
Here are some important things taxpayers should know about estimated tax
payments:
–Taxpayers generally must make estimated tax payments if they expect to
owe $1,000 or more when they file their 2020 tax return.
–Aside from business owners and self-employed individuals, people who
might also need to make estimated payments include sole proprietors,
partners and S corporation shareholders. It also often includes people
involved in the sharing economy.
–Estimated tax requirements are different for farmers and fishermen.
–Corporations generally must make these payments if they expect to owe
$500 or more on their 2019 tax return.
–The remaining deadlines for paying 2020 estimated taxes are September
15, 2020 and January 15, 2021.
–Taxpayers can review these forms for help figuring their estimated
payments:
Form 1040-ES, Estimated Tax for Individuals
Form 1120-W, Estimated Tax for Corporation
Taxpayers have options for paying estimated taxes. These include:
–Direct Pay from a bank account.
–Paying by credit or debit card or the Electronic Federal Tax Payment
System.
–Mailing a check or money order to the IRS.
–Paying cash at a retail partner.
Taxpayers who don’t pay enough tax throughout the year may have to pay
an underpayment penalty.
More information at IRS.gov:
Search: Publication 505, Tax Withholding and Estimated Tax
