The Triangle LivingThe Triangle Living
  • Home
  • Latest News
  • Real Estate
  • Business
  • RTP
  • Chatham Park
  • Food and Drink

Subscribe to Updates

Get the latest Real Estate, Finance news directly to your inbox.

What's Hot

Let’s Get High

May 25, 2023

Seaside Snacks

May 25, 2023

New home sales climbed more than expected in April

May 23, 2023
Facebook Twitter Instagram
Facebook Twitter YouTube Telegram
The Triangle LivingThe Triangle Living
Consult Subscribe
  • Home
  • Latest News
  • Real Estate

    New home sales climbed more than expected in April

    May 23, 2023

    Examining how Raleigh’s proposed budget will impact transportation, housing

    May 17, 2023

    New home construction rose in April after a dip in March

    May 17, 2023

    ‘We need more of it’: Construction begins on new affordable housing development in Raleigh

    May 10, 2023

    More homes sitting on market and selling under asking price, new housing data shows

    May 9, 2023
  • Business
  • RTP
  • Chatham Park
  • Food and Drink
The Triangle LivingThe Triangle Living
Home » How to Use IRS Form 1040-ES: Estimated Tax for Individuals
Business

How to Use IRS Form 1040-ES: Estimated Tax for Individuals

Press RoomBy Press RoomSeptember 20, 2022No Comments5 Mins Read0 Views
Facebook Twitter Telegram Tumblr Reddit WhatsApp
Share
Facebook Twitter LinkedIn Pinterest Email

You can use Form 1040-ES to pay income tax, self-employment tax and any other estimated tax you may be liable for.

For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post.

Who pays estimated tax?

Not all income is set up so that taxes are deducted at the source. Independent contractors and freelancers, for example, do not have tax deducted from their pay. Earnings from interest, dividends and rent, taxable unemployment compensation, retirement benefits, and the taxable part of your Social Security benefits are other examples of income that is not taxed at the source. If you have any such income coming in, then you should pay the estimated tax.

Get every dollar you deserve with unlimited tax advice from experts who know self-employment taxes inside and out. Whether you’re a freelancer, independent contractor, small business owner, or have multiple streams of income, TurboTax Self-Employed can help you uncover the industry-specific deductions you qualify for. Plus, you can get up to an additional $20 off when you file with TurboTax Self-Employed.

Paying estimated taxes

The estimated tax payment is based on an estimation of your income for the current year. As such, it is possible to underestimate, resulting in an underpayment and penalty. To avoid this penalty, use your previous year’s taxes as a guide. As long as you pay 100 percent of the previous year’s tax, you won’t be subject to the penalty. If you end up overpaying, you can receive a tax refund at the end of the year.

You should pay the quarterly tax in a timely fashion, or you may find yourself subject to a penalty for a particular quarter because the tax was received late, even if you overpaid the total tax due for the year and are eligible for a refund.

Calculating estimated taxes

The calculation is based on an estimate of current income. To help with the estimation, you can start with the previous year’s federal tax return. Look at the taxable income, tax paid, credits, and deductions from the previous year and compare them to the current year’s numbers. The Form 1040-ES package includes worksheets to help you account for differences between the previous and current year’s income and calculate the tax you owe.

Who should file 1040-ES

To figure out if you should file 1040-ES for the current year make the following calculation:

Take the tax you paid in the previous year. Calculate 90 percent of the tax you estimate you will owe in the current year. Compare the two, and take the smaller number. (For example, you paid $500 as tax the previous year. This year you estimate you will pay $1,000, and 90 percent of that is $900. The smaller of the two numbers is $500.) Now compare the total of any withholdings and credits you may have to this number.

If you expect to owe at least $1,000 in taxes, after all deductions and credits, AND your withholding and credits are expected to be less than the calculated number—in this example $500—then you should file 1040-ES.

TurboTax Live experts look out for you. Expert help your way: get help as you go, or hand your taxes off. You can talk live to tax experts online for unlimited answers and advice OR, have a dedicated tax expert do your taxes for you, so you can be confident in your tax return. Enjoy up to an additional $20 off when you get started with TurboTax Live.

Exception to filing

If you had no tax liability for the prior year, you were a U.S. citizen or resident for the whole year and your prior tax year covered a 12-month period, then you do not have to file Form 1040-ES.

When to file 1040-ES

Estimated tax payments are due four times in a tax year. For calendar year taxpayers (which is most individuals), the due dates are April 15, June 15, September 15 of the current year, and January 15 of the following year or the next business day if the due date falls on a weekend or holiday.

If you work on a fiscal year calendar—the year does not run from January 1 to December 31—then the four due dates are spread through the fiscal year, on the 15th day of the fourth, sixth and ninth month of the year and on the 15th of the first month of the next fiscal year.

Making payments

You can pay weekly, biweekly, or whatever interval suits you, as long as you pay in full the amount due for that period. You can also estimate your tax liability for the whole year and pay the estimated tax in one lump sum by the 15th of April of the current year.

TurboTax Self-Employed will ask you simple questions about your life and help you fill out all the right forms. Perfect for independent contractors and small businesses. We’ll search for over 500 tax deductions to get you every dollar you deserve and help you uncover industry-specific deductions.

TheStreet, Inc. All rights reserved. Action Alerts PLUS is a registered trademark of TheStreet, Inc.



Read the full article here

Share. Facebook Twitter Pinterest LinkedIn Tumblr Telegram Email
Previous ArticleLas Vegas, Las Vegas Strip Get Ready for Huge Cannabis Rule Change
Next Article White House names NC economist to manage CHIPS Act rollout

Related Posts

Press coffee shop & cafe to open in downtown Raleigh NC

May 2, 2023

Report advises against minimum substation safety rules

May 2, 2023

Why This Year’s ‘10 Highest-Paid Athletes’ List Looks Different

May 2, 2023

Regional Banks Tumble to 52-Week Lows. Here’s the Chart View.

May 2, 2023

Why One Education Company Is Blaming AI For Its Stock Collapse

May 2, 2023

What Happened to Silicon Valley Bank? Why Is It in Trouble?

May 2, 2023
Add A Comment

Leave A Reply Cancel Reply

Top Articles

Seaside Snacks

May 25, 2023

New home sales climbed more than expected in April

May 23, 2023

Veggie Tales

May 19, 2023

Subscribe to Updates

Get the latest Real Estate, Finance news directly to your inbox.

Advertisement

Your Top Source for the latest Real Estate, Finance, Business and general news about North Carolina, Follow us to get the latest news from the most trusted sources.

We're social. Connect with us:

Facebook Twitter Instagram Pinterest YouTube
Top Insights

Top UK Stocks to Watch: Capita Shares Rise as it Unveils

January 15, 2021
8.5

Digital Euro Might Suck Away 8% of Banks’ Deposits

January 12, 2021

Oil Gains on OPEC Outlook That U.S. Growth Will Slow

January 11, 2021

Subscribe to Updates

Get the latest Real Estate, Finance news directly to your inbox.

© 2023 The Triangle Living. All rights reserved.
  • About
  • Privacy Policy
  • Terms and Conditions
  • Advertise
  • Contact

Type above and press Enter to search. Press Esc to cancel.