Tax & Business Services

If you think you'll owe more than $1,000 in taxes, you'll probably need to make estimated tax payments throughout the year. That means April 15, June 15, Sept. 15 and Dec. 15 are all tax days.

You can set up your estimated taxes so that they're paid in even amounts when due. Don't forget that you may also have to pay state and local taxes in addition to federal income tax on an estimated basis. Check with your state's estimated tax schedule, available from your state's department of revenue, for more information.

The Methods of Calculating Estimated Tax
Consult a tax professional or an accountant to see which of these 4 methods would best benefit your small business. Restrictions apply to each method.

1. Pay taxes on the current year's income. You estimate the amount of this year's income and what the taxes will be, and then divide the total into four equal payments. Note: You're only required to pay 90% of the current year's estimated federal income taxes.
2. Pay taxes according to last year's income. You take what you owed in federal income taxes last year and make 4 equal payments throughout the current year, which adds up the total paid from last year. (Some taxpayers must pay a little more than last year's amount to use this method.)
3. Pay taxes by annualizing income. To annualize income means to take information from 1 accounting period of the year and to treat it as though the information applies to the entire year. If a significant portion of your business income is received after a particular quarter ends, annualizing income may result in estimated payments that more closely match the income as it is received.
4. Pay taxes on adjusted seasonal income: Like annualizing income, if your business income is received during a particular season, you will take information from 1 accounting period of the year and treat it as though the information applies to the entire year. You'll divide that amount by 4 and then pay federal income taxes totaling that amount throughout the year.