Individuals (2004 IRS FAQ)

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IRS FAQ 9.3 Estimated Tax: Individuals

How do I know if I have to file quarterly individual estimated tax payments?

Estimated tax payments can be used to pay Federal income tax, self-employment tax, and household employment tax. To estimate if you need to pay tax on income not subject to withholding or on other income from which not enough tax is withheld, you need to calculate if the total tax you'll owe on your annual income tax return will be covered by the amount of tax you have already had either:

withheld from wages and other payments, or
paid in earlier estimated payments for the year, or
credited to your account from adjustments or overpayments to previously filed returns.

Generally, you should make estimated tax payments if you will owe tax of $1,000 or more, after withholding and credits, and the total amount of tax withheld and your credits will be less than the smaller of:

90% of the tax to be shown on your current tax return, or
100% of the tax shown on your prior year's tax return, if your prior year's tax return covered all 12 months of the year. However, if your prior year's adjusted gross income exceeded $150,000, or $75,000 if you filed a separate return from your spouse, then you must pay 110% instead of 100% of last year's tax. (Note: the percentages change depending on the tax year. Refer to Publication 505, Tax Withholding and Estimated Tax.)

Estimated tax requirements are different for farmers and fishermen. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules and about estimated tax in general. Get Form 1040-ES (PDF), Estimated Tax for Individuals, to help you figure your estimated tax liability for 2004.

References:

Publication 505, Tax Withholding and Estimated Tax
Form 1040-ES (PDF), Estimated Tax for Individuals

Do self-employment taxes need to be paid quarterly or yearly?

Self-employment tax is paid by making quarterly estimated tax payments which include both income tax and social security tax.

References:

Publication 334, Tax Guide for Small Business
Publication 505, Tax Withholding and Estimated Tax
Publication 533, Self-Employment Tax

When are the quarterly estimated tax returns due?

Your first estimated tax payment is usually due the 15th of April. You may pay the entire year's estimated tax at that time, or you may pay your estimated tax in four payments. The four payments are due April 15th, June 15th, September 15, and January 15th of the following year.

If the due date for making an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or legal holiday. For example, a payment due Saturday, January 15, 2005 will be on time if you make it by Tuesday January 18, 2005. Note: Monday January 17, 2005 is a legal holiday.

References:

Publication 505, Tax Withholding and Estimated Tax

How do I report the estimated payments I have made when I file my taxes at the end of the year?

Take credit for all your estimated tax payments for 2004 on line 64 of Form 1040 (PDF), U.S. Individual Income Tax Return, or line 40 of Form 1040A (PDF) , U.S. Individual Income Tax Return.

References: