Question

I need to estimate tax liability because I know I have a balance due and owe taxes. How do I estimate extension tax liability?

Answer

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.

Related Topics

Related Resources

IRS Letter 5043 – Notification of Possible Income Underreporting

Learn more about IRS Letter 5043 and how to handle an inquiry of your business' income with help from the tax experts at H&R Block.

Installment Agreement for Business

Read the IRS definition of an installment agreement for businesses and get more insight from the tax experts at H&R Block.

IRS Letter 178C – Amended Return Incomplete

Learn more about letter 178C, why you received it, and how to handle an IRS 178C letter with help from the tax experts at H&R Block.

The Difference Between Major IRS Forms

We know it's hard to know every IRS form. The team at H&R Block Tax is here to explain the difference between major IRS forms