4 FAQs About Estimated Quarterly Payments

<h1>4 FAQs About Estimated Quarterly Payments</h1>Author: <a title="Roni Deutch" href="http://www.articlesbase.com/authors/roni-deutch/46490.htm">Roni Deutch</a> Who needs to make estimated quarterly tax payments? According to the IRS, “in most cases, you must make estimated tax payments if you expect to owe at least $1,000 in tax for 2009 (after subtracting your withholding and credits) and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your current year’s tax return, or 100% of the tax shown on your prior year’s tax return.  (Your prior year tax return must cover all 12 months.)” So basically, if you have any income over $1,000 that has not had federal taxes withheld then you will need to make quarterly payments. This applies to any source of revenue, from self-employment earnings to interest and dividend payments. When are they due? Some first-time quarterly taxpayers may get a little confused, because the "quarterly" payments are not divided in to exact quarters. While the reason for this is unclear, just be sure to put the exact dates in bold letters on your calendar. That way you can avoid being hit with a late penalty. For income earned Jan. 1—March 31, due by April 15 For income earned April 1—May 31, due by June 15 For income earned June 1—August 31, due by September 15 For income earned Sept. 1—Dec. 31, due by January 15 How do I calculate an Estimated Tax Payment? Although it seems complicated at first glance, estimated quarterly tax payments are not all that difficult to calculate, and the whole process should take no more than an hour or two. To complete the calculations, you will need: last year’s tax return, a calculator, a pen, and piece of paper. There are a couple of ways to calculate how much you owe, and for more details you can download IRS Form 1040-ES, but the details below explain one of the simplest methods.    Discover your average tax rate by pulling out last year’s tax return. To do so, divide your income tax from last year (should be line 43 on an average 1040) by your adjusted gross income from last year (line 37). You then multiply this number by your total income for this quarter. If you are a self-employed individual, you will need to add additional costs for Medicare and social security, usually about 15.5%. For more details on calculating your payment, we highly recommend you seek advice from a professional tax preparer. How do I make the payments? Estimated quarterly tax payments, once estimated, are very simple to make. One way is to write a check for the amount and send it to the IRS along with a 1040-ES voucher form. You also have the option to make payments quickly online through the electronic federal payment system. Check out <a target="_blank" href="https://<a href="http://www.eftps.gov/eftps/">https://www.eftps.gov/eftps/" target="_blank">www.eftps.gov/eftps/">https://www.eftps.gov/eftps/</a></a> for more information.About the Author: The Roni Deutch Tax Center is one of the nation's hottest <a href="http://www.rdtcfranchise.com">income tax franchise</a>. <a href="http://www.rdtc.com">Income tax preparation</a> is a recession resistant industry. Learn more about this new tax franchise opportunity today.

Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/taxes-articles/4-faqs-about-estimated-quarterly-payments-1009384.html" title="4 FAQs About Estimated Quarterly Payments">4 FAQs About Estimated Quarterly Payments</a>

Who needs to make estimated quarterly tax payments?

According to the IRS, “in most cases, you must make estimated tax payments if you expect to owe at least $1,000 in tax for 2009 (after subtracting your withholding and credits) and you expect your withholding and credits to be less than the smaller of:

90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)”

So basically, if you have any income over $1,000 that has not had federal taxes withheld then you will need to make quarterly payments. This applies to any source of revenue, from self-employment earnings to interest and dividend payments.

When are they due?

Some first-time quarterly taxpayers may get a little confused, because the "quarterly" payments are not divided in to exact quarters. While the reason for this is unclear, just be sure to put the exact dates in bold letters on your calendar. That way you can avoid being hit with a late penalty.

For income earned Jan. 1—March 31, due by April 15

For income earned April 1—May 31, due by June 15

For income earned June 1—August 31, due by September 15

For income earned Sept. 1—Dec. 31, due by January 15

How do I calculate an Estimated Tax Payment?

Although it seems complicated at first glance, estimated quarterly tax payments are not all that difficult to calculate, and the whole process should take no more than an hour or two. To complete the calculations, you will need: last year’s tax return, a calculator, a pen, and piece of paper. There are a couple of ways to calculate how much you owe, and for more details you can download IRS Form 1040-ES, but the details below explain one of the simplest methods.

Discover your average tax rate by pulling out last year’s tax return. To do so, divide your income tax from last year (should be line 43 on an average 1040) by your adjusted gross income from last year (line 37). You then multiply this number by your total income for this quarter. If you are a self-employed individual, you will need to add additional costs for Medicare and social security, usually about 15.5%. For more details on calculating your payment, we highly recommend you seek advice from a professional tax preparer.

How do I make the payments?

Estimated quarterly tax payments, once estimated, are very simple to make. One way is to write a check for the amount and send it to the IRS along with a 1040-ES voucher form. You also have the option to make payments quickly online through the electronic federal payment system. Check out https://www.eftps.gov/eftps/ for more information.

The Roni Deutch Tax Center is one of the nation's hottest income tax franchise. Income tax preparation is a recession resistant industry. Learn more about this new tax franchise opportunity today.

Rate this Article:

0 / 5 stars - 0 vote(s)

Re-Publish

Article Source: http://www.articlesbase.com/taxes-articles/4-faqs-about-estimated-quarterly-payments-1009384.html

Article Tags: tax, taxes, quarterly payments, irs

Related Videos
Related Articles
Ask / Related Q&A

Play

Learn about the Single Status on a Tax Return

Play

Learn about the 2007 Tax Rebate

Play

Learn about the Alternative Minimum Tax

Play

How to Calculate your Stimulus Payment

Play

How to Help Your Child Buy a Home

Latest Taxes Articles
More from Roni Deutch

Why you should Hire a Professional Income Tax Preparer

By: Chad Fisher | 09/11/2009
Most of us do not look forward to tax season at all and a way to help us not dread this nearly as much is by hiring a professional to assist us with your taxes. This can help to provide us with the help we need to get the job done correctly and quickly in the process. So, the next time you file your taxes, consider hiring a professional.

File Income Taxes to Avoid Penalties

By: Chad Fisher | 09/11/2009
If you want to be certain you avoid paying income tax penalties, you will want to be certain you file your income taxes as early as possible. This can allow you to avoid many penalties that people have to pay as a result of filing their taxes late.

How to Avoid Income Tax Audits

By: Chad Fisher | 09/11/2009
If you are like most people you will so most anything to avoid a tax audit. This is a very tough thing for most people to have to go through and can really be quite unnerving for most people that have to go through this. If you are called for an audit you will see that it can be tough to prepare for.

TO FILE OR NOT TO FILE YOUR TAX RETURN- THE NON-COMPLIANCE GAMBLE!

By: Muhammad Arshad | 07/11/2009
Tax compliance is a complex phenomenon shaped by so many factors. It cannot be attained by simply mentioning in law who should file return or not. This articles discusses various factors affecting tax compliance in Pakistan.

Tax rates for tax year 2007-a case for marginal relief

By: Muhammad Arshad | 07/11/2009
Tax card has been changed in the Finance Act, 2006 due to which tax leviable on marginal income has increased enormously. Although the government has taken steps to rectify the mistake in case of employees but in other taxpayers still case for marginal relief exists.

Restoring faith in Income Tax Department

By: Muhammad Arshad | 07/11/2009
Tax culture cannot be promoted unless people have faith that there is rule of law and their money is being spent for welfare of the people and is not siphoned of by the rulers.

Where To Find Tax Lien Auction

By: John Lane | 07/11/2009
There are times when a property owner is unable to pay the obligation in property tax. When this happen, a property owner becomes a delinquent taxpayer and a governing authority is in charge of collecting the taxes. However, if the authority is not able to collect the required property taxes, they will opt to take the final step to collect the taxes. The public tax lien auction is the final step that will take the delinquent properties to be sold. Tax lien auction is an auction ordered by the co

Know More About Government Tax Liens

By: Jake Trump | 07/11/2009
There are services offered by many reliable websites one is the government tax liens. This kind of service gives the buyer a chance to claim for money that is higher than the other government tax liens. It is being secured by the real state as well as the mortgages. The government tax liens list provided gives the buyer the capability to filter and sort the list suitable for your own criteria. The list spares you from visiting a courthouse that is a requirement in processing the required tax.

8 Alternatives to Foreclosing on your Home Loan

By: Roni Deutch | 02/11/2009 | Real Estate
Whether or not the economy is improving, one fact remains the same: families all over the country are struggling to make their mortgage payments. Depending on your unique financial situation (the value of your home, changes to your income, missed payments etc.) foreclosure may not be your only option.

The 3 Types of IRS Offers in Compromise

By: Roni Deutch | 02/11/2009 | Taxes
The IRS offers three (3) different payment options when it comes to the Offer in Compromise: Lump Sum Cash Offers, Short Term Periodic Payment Offers, and Deferred Periodic Payment Offer. However, the difference in these payment options is not solely the difference in how the Offer in Compromise is to be paid. Rather, each “payment option” actually impacts the total amount the taxpayer will pay to the IRS.

6 Frightening IRS Horror Stories

By: Roni Deutch | 26/10/2009 | Taxes
For most of us, the scariest thing in life is not a ghost, vampire, or witch, but a letter from the IRS. To celebrate the Halloween season, we have compiled some of the scariest IRS horror stories. They may not cause you to lose any sleep, but should at least be a reminder to keep receipts and stay up to date on your rights as a U.S. taxpayer.

The Future of the First-Time Homebuyers Credit

By: Roni Deutch | 26/10/2009 | Real Estate
As the deadline to claim the first-time homebuyers credit gets closer and closer, more experts are predicting that Congress will pass some type of incentive extension within the next few weeks. In fact, there are reportedly over 5 bills currently being considered by the Senate and House of Representatives.

Taxes and the Elderly

By: Roni Deutch | 14/10/2009 | Taxes
One of the groups being hit the hardest by the recession are elderly taxpayers. Recent studies are even showing that many retired citizens are being forced to rejoin the competitive work force in order to make ends meet. Some people mistakenly think that the IRS treats senior citizens unfairly, but this is not necessarily the case. As you will see, the IRS has a special set of laws designed to help elderly citizens in this country.

How to Amend a Tax Return

By: Roni Deutch | 14/10/2009 | Taxes
During the magical time of year known as tax season, millions of US taxpayers scurryabout to prepare their tax returns for eventual filing. However, since the 1040 filing process can be very complex, it is not surprising that taxpayers make mistakes when preparing their tax returns. Worse still, all tax returns must be signed under criminal penalty of perjury, which can cause some discomfort to taxpayers when they are not confident that they are submitting all of the correct information. For tho

Top 7 Tax Record Keeping Tips

By: Roni Deutch | 09/10/2009 | Taxes
Everyone knows it is important to keep your tax related documents should you be audited. However, most taxpayers are unsure on which specific documents should be kept, and which are safe to get rid of. To help our readers looking for help with this topic, we have put together the following list of tax recordkeeping tips.

What Cap and Trade Reform Means to US Taxpayers

By: Roni Deutch | 09/10/2009 | Taxes
Unfortunately, nearly any reforms on cap and trade will have a direct effect on taxpayers. This could be especially troubling in a time where many families in this country are already struggling to get by.