Estimated Income Tax Payments
Estimated income tax payments are made to pay taxes on income generated in a given tax year - now 2022 - that is not subject to periodic tax withholding payments as wages are via the W-4 form. Generally, if you are an employee whose only income is from a W-2 with taxes withheld, you will not have to worry about making estimated income tax payments as this is done through your employer. Read this IRS publication for detailed information about tax withholding and tax estimate payments.
We are now currently in a period where taxpayers are making estimated tax payments for the Tax Year 2022 to prepare for their 2022 Returns. Quarterly estimated tax payments are made by the taxpayer so they are not in significant debt to the IRS.
The most common taxpayers who are subject to make estimated tax payments are the self-employed who may receive income on a 1099 form, such as a 1099-NEC. If you receive taxable income with no tax withheld, you are responsible for making these income tax payments on your own as you do not have an employer to do this for you. Employees who receive a W-2 have their taxes withheld based on the W-4 withholding form they submit. 1099 employees do not have this and should make estimated payments so they do not owe tax penalties at the end of the year.
If a taxpayer generates the following types of incomes throughout a given tax year, it may be subject to estimated income tax payments via periodic payments:
Who Should Make Estimated Tax Payments
Beyond the above listed income types, here are the general guidelines on who should make estimated income tax payments:
- Expected income tax amount for the given tax year is at least $1,000 after deducting withholding and refundable tax credits. This is when you file your tax return, you expect to owe at least $1,000.
- Tax withholding and refundable tax credits are less than the smaller of:
- 90% of the expected taxes of your 2022 Tax Return, or
- 100% of the taxes shown on your 2021 Tax Return.
- In other words, you can use your exact figure from your previous year return or you can estimate within 10% of your anticipated 2022 tax balance.
Of course, these are just estimated. If you underestimate by a small enough amount, you should not owe penalties and will instead simply owe the difference in tax when you prepare and file your 2022 Tax Return. If you over estimate during the year, then you will be owed a tax refund, similarly to when an employer withholds too much tax during the year. When you prepare your return on eFile.com, you can input the estimated tax payments you have made. The eFile tax app will put them on your return and help you determine if you owe additional tax or if you are owed a tax refund.
In general, if you expect to owe tax at the end of the year, you should make these estimated payments. Quarterly tax payments should be made four times per year and the IRS does have guidelines or deadlines for these timeframes. These were as follows for 2021 Taxes (these deadlines have passed; reconcile your estimated payments by e-filing a 2021 Return):
- April 15, 2021 for income earned January 1 - March 31, 2021.
- June 15, 2021 for income earned April 1 - May 31, 2021.
- September 15, 2021 for income earned June 1 - August 31, 2021.
- January 15, 2022 for income earned September 1 - December 31, 2021.
Payments can be made close to these dates, but taxpayers may find it easiest to make payments around the due date that way they can keep a consistent schedule.
For 2022 Returns, taxpayers whose income is subject to estimated withholding will want to begin making their estimated 2022 payments by these dates:
- April 18, 2022 for income earned January 1 - March 31, 2022.
- June 15, 2022 for income earned April 1 - May 31, 2022.
- September 15, 2022 for income earned June 1 - August 31, 2022.
- January 15, 2023 for income earned September 1 - December 31, 2022.
Like with most taxing guidelines, there are exceptions about making estimated tax payments. Here is a high level overview about 2022 tax estimate payments. :
- A: Will you owe $1000 or more for 2022 after subtracting income tax withholding and refundable credits from total tax? Do not subtract estimated tax payments! If yes, read B. If no, no estimate payments required.
- B: Will your income tax withholding and refundable credits be at least 90% of the tax shown on your 2022 tax return? (66.33% for farmers and fishermen). If yes, no estimated tax payments required. If no, read C.
- C: Will your income tax withholding and refundable credits be at least 100% of the tax shown on your 2022 tax return? If no, you must make estimated tax payments.
- You were US Citizen or resident alien during 2022 and you had no tax liability for the full 12 month 2022 Tax Year. No tax liability for 2022 means your tax was zero or you are not required to file an income tax return.
- There are special rules for farmers, fishermen, certain high income individuals, and certain household employees.
- If a majority of income is from farming or fishing, the 90% guideline above is lower at around 66%.
- Household employees will want to work with their employer to see how their taxes are to be handled (if they have tax withheld from other income, if they would be required to make estimated payments if household employment taxes were excluded, etc.). Generally, if you pay a household employee cash wages of $2,300 or more in 2021, tax withholding is required by you as the payer. See the IRS Household Employer's Tax Guide.
- If your Adjusted Gross Income (AGI) was greater than $150,000 for 2022, then, you should make payments if your estimated withholding and credits are less than 110% of your 2022 Taxes (instead of 100%).
- For more details, see instruction on Form 1040-ES.
- See online payment options.
Where to Mail Estimated Tax Payments or 1040-ES
It is much safer and easier to pay your estimated taxes online, but the addresses below are where you should mail your Form 1040-ES with payment based on your resident state.
Arkansas, Connecticut, Delaware, District of Columbia, Illinois, Indiana, Iowa, Kentucky, Maryland, Maine, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, Oklahoma, Rhode Island, Virginia, West Virginia, Vermont, Wisconsin
Internal Revenue Service
P.O. Box 931100
Louisville, KY 40293-1100
Alabama, Arizona, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, South Carolina, Tennessee, Texas
Internal Revenue Service
P.O. Box 1300
Charlotte, NC 28201-1300
Alaska, California, Colorado, Hawaii, Idaho, Kansas, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Utah, Washington, Wyoming
Internal Revenue Service
P.O. Box 802502
Cincinnati, OH 45280-2502
A foreign country, U.S. territory, use an APO/FPO address, file Form 2555, or if you are a dual-status alien
Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303
Estimate Your Income Taxes
Important Tax Tips on how to estimate your given calendar year tax amount:
- Use the free eFile.com 2022 Tax Year Tax Calculator and estimate your income and taxes for the year:
2022 Tax Year Calculator
- If your income situation is similar to the prior year, make estimated payments based on this. For example, if you owed taxes last year and your income is around the same this year, consider making larger estimated tax payments.
- If you also receive W-2 income in addition to the income types listed above, you can increase your federal tax withholding via Form W-4. The W-4 form has a line that allows you to withhold an additional income tax amount. Use the eFile.com W-4 TAXometer to calculate the given calendar year tax return withholding.
- If your income changes throughout the year, you should make estimates based on the annualized income installment method. See instructions on Form 1040-ES or Publication 505 on Tax Estimates chapter 2.
- The IRS may apply a penalty if you didn’t pay enough estimated taxes for the year, you didn’t pay the required estimate amount, or didn't pay on time.
Form 1040-ES and Payment Methods
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