I need to estimate tax liability because I know I have a balance due and owe taxes. How do I estimate extension tax liability?
To estimate your taxes due/balance owed, you can do either of these:
- Use the estimated tax worksheet in the instructions for Form 1040-ES. Use Line 13c as your estimated taxes due/balance owed on your extension as filed on Form 4868.
- Complete your return with the actual figures you have and estimate figures for those that you don’t. Use the amount of tax due on the return as your estimated taxes due/balance owed. Make sure you replace all of your estimates with actual figures before filing your return.
When you eventually file your return:
- You’ll receive a refund for any tax you overpaid.
- If you underpaid and owe tax, the remaining balance owed amount will be subject to interest and penalties.
The IRS has not received your tax return so they have proposed taxes due. Learn more about IRS Letter 2566 from the tax experts at H&R Block.
Learn about an IRS claim for refund (Form 843). Read the IRS definition and get more insight from the experts at H&R Block.
Learn about the IRS estimated tax penalty. Read the IRS definition and get more insight from the tax experts at H&R Block.
Learn what to do if you've received one or more IRS notices, and you're not sure what the tax problem is or where to start.