Quarterly Estimated Taxes

The IRS requires that taxes be paid as income is earned or received during the tax year. This can be done via withholdings or quarterly estimated tax payments. The information discussed here is applicable to individuals, not any other type of taxpayer.

If your withholdings are not sufficient, then you may need to also make quarterly estimated tax payments. Quarterly estimated tax payments are due April 15, June 15, September 15, and January 15 of each year.

Quarterly estimated tax payments need to be made if:

• you expect to owe $1,000 or more when you file your tax return; and

• you expect your withholdings to be less than the smaller of:

  • 90% of your current year tax liability

  • 100% of the tax shown on your previous year’s tax return - this increases to 110% if your prior year adjusted gross income was more than $150,000 ($75,000 MFS)

If you are required to make estimated tax payments and do not make them, the IRS may assess a penalty for underpayment of estimated taxes. This penalty can be assessed even if you receive a refund when you file your tax return.

Taxpayers who commonly need to make quarterly estimated tax payments are:

• self-employed persons

• partners in a partnership

• shareholders in a S-corporation

• taxpayers who have investment income such as dividends, interest, and capital gains

• W2 employees who do not have sufficient withholdings

Quarterly estimated tax rules also apply to state income tax, as well. Tax planning and working with a CPA can help alleviate uncertainty around withholdings and quarterly estimated tax payments. The Calculated CPA can assist taxpayers that are interested in ensuring their withholdings and quarterly estimated tax payments are sufficient. Many of these projects can be completed in 2-3 hours.

All information contains general information for taxpayers and should not be relied upon as advice. Taxpayers should seek professional tax advice for information about your specific situation.