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Some taxpayers may need to make estimated tax payments

Tuesday, September 08, 2020

 

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:
  • Taxpayers have options for paying estimated taxes. These include:

Taxpayers who don’t pay enough tax throughout the year may have to pay an underpayment penalty.

More information:Publication 505, Tax Withholding and Estimated Tax

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Alliance Tax Solutions, LLC, Accountant, Atlanta, GA