What are estimated tax payments and when should I make them?
Drenen Financial Services is here to provide clarity on estimated tax payments. Call us at 413-569-0015 or email office@drenenfs.com to schedule an appointment, and visit drenenfs.com for more information.
What Are Estimated Tax Payments?
Firstly, estimated payments are periodic payments you make throughout the year to cover taxes on income that isn’t subject to withholding. Specifically, this typically includes:
- Self-employment income
- Interest, dividends, and capital gains
- Alimony
- Prizes and awards
According to the IRS, you need to make estimated tax payments if you expect to owe at least $1,000 in tax after subtracting your withholding and refundable credits.
When Should I Make Estimated Tax Payments?
You should make estimated tax payments if your income comes from self-employment, investments, or other sources without tax withholding. Furthermore, to avoid penalties, the IRS requires you to pay estimated taxes quarterly.
Payment Due Dates:
- April 15: First-quarter payment
- June 15: Second-quarter payment
- September 15: Third-quarter payment
- January 15 (following year): Fourth-quarter payment
For accurate payment details, consult the IRS’s Estimated Tax Payment Guide.
How to Calculate Your Estimated Tax Payments
- Estimate Your Income: Firstly, start by estimating your expected income for the year.
- Determine Taxable Income: Subsequently, subtract any deductions to calculate your taxable income.
- Use Tax Rates: Then, apply the IRS tax rates to your taxable income.
- Subtract Credits and Withholdings: Additionally, account for any tax credits and taxes already withheld.
- Divide Payments Quarterly: Finally, divide the estimated tax due by four to determine your quarterly payment.
Drenen Financial Services Can Help
Calculating and paying estimated taxes can be tricky. Therefore, Drenen Financial Services specializes in tax preparation and planning to help you navigate your tax obligations efficiently.
Our Services Include:
- Tax Preparation and Filing: In particular, we’ll handle your federal and state tax returns accurately.
- Tax Planning and Advisory: Moreover, we’ll provide tailored advice to minimize your tax liability.
- IRS Audit Assistance: We’ll represent you in case of an IRS audit or inquiry.
Take Action Today
Call Drenen Financial Services at 413-569-0015 or email office@drenenfs.com to schedule an appointment, and visit drenenfs.com for more information. Let us help you navigate estimated tax payments with ease.
