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Estimated Tax - Form 1040ES

Income tax is a pay-as-you-go system. If you're an employee, you pay as you go through withholding. However, you might be self-employed. If you are, you must make quarterly estimated tax payments for the amount you expect to owe the IRS. These payments should satisfy both your income and self-employment taxes.

If you have other income, you might be able to withhold enough to cover self-employment taxes. Other income could include W-2 wages. So, you might not need to make estimated payments. However, in some cases, you might need to make estimated payments. Ex: You receive a substantial amount of taxable income not subject to withholding.

You might make estimated payments for income that’s not tax-free and comes from:

  • Stock sales
  • Personal residence sale
  • Interest
  • Dividends

Estimated tax payments for 2014 are due:

  • April 15, 2014
  • June 15, 2014
  • Sept. 15, 2014
  • Jan. 15, 2015

You can make estimated tax payments using any of these methods:

  • Apply your 2013 refund to your 2014 estimated tax.
  • Mail a check or money order with Form 1040-ES: Estimated Tax for Individuals.
  • Use the Electronic Federal Tax Payment System (EFTPS) to submit payments electronically. Visit www.eftps.gov or call 800-555-4477. You can make payments weekly, monthly, or quarterly. You can schedule payments up to 365 days in advance.
  • If you'd like to learn more about credit-card options, see www.irs.gov. You might be charged a convenience fee for using your credit card.

To learn more, see Form 1040-ES instructions at www.irs.gov.

You must make estimated tax payments and file Form 1040-ES if both of these apply:

  • Your estimated tax due is $1,000 or more.
  • The total amount of your tax withholding and refundable credits is less than the smaller of:
    • 90% of your 2014 tax liability
    • 100% of your 2013 tax liability

Special rules exist for higher-income taxpayers. Your 2013 adjusted gross income (AGI) might be more than:

  • $75,000
  • $150,000 if married filing jointly

If it is, you must prepay 110% instead of 100% of the 2013 tax. You’ll need to do this to avoid a possible underpayment penalty for 2014.

If you'd like to learn more about the estimated tax penalty, see the Underpayment of Estimated Tax tax tip.

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