Estimated Tax Payments

What are estimated tax payments?

Estimated tax payments are payments for taxes on income that is not subject to withholding tax. This can include income from self-employment, business earnings, interest, rent, dividends and other sources. Many business owners and individuals who receive K-1s for their interests in companies must make estimated tax payments on this type of income.

The IRS requires estimated taxes to be paid quarterly, typically in four installments. To simplify – if you work for a large company, you receive a paycheck and the company pays taxes on your behalf. If you are a business owner, rental property owner, or investment owner, no one is withholding taxes on these respective types of income! Hence, it is up to you to make estimated tax payments during the year.

If you underpay your estimated taxes, you will have to write a bigger check to the IRS when you file your tax return. If you overpay your estimated tax, you will receive the excess amount as a tax refund (similar to how withholding tax works). Pay during the year and reconcile on April 15.

The following groups are typically liable for making estimated tax payments:

Self-Employed Individuals/Sole Proprietors

If you are a sole proprietor or the single member of an LLC, make sure you are paying estimated taxes each quarter on your self-employment income. It is very important to calculate these estimates due because self-employment tax is owed on these amounts. Additional taxes unpaid means additional penalties!

Partners in Partnerships and S Corporation Shareholders

Business earnings from partnerships and S-Corporations will require estimated tax payments. Though you may not receive your Form K-1 until the following year, it is essential that your share of business net income is calculated and estimated tax payments are made on these amounts.

Rental Owners/Investment Income

As stated earlier, no one is withholding tax for you! It is up to you to pay taxes on any income received during the year. If you earn rental income or dividends/interest on your investments, it is up to you to pay the appropriate amount of taxes each quarter, according to the income received.

Owing Taxes In The Prior Year

If you owed taxes at the end of last year, it probably means that too little was withheld from your paychecks, or you had other income that increased your tax liability. This is a flag to the IRS that you should be making estimated tax payments.

Looking for assistance with estimated tax payments?

David Beck, CPA will help you accurately calculate and file your estimated taxes properly and on-time.  Failing to pay on time can result in penalties. Let our team of CPAs prepare your federal and state estimated taxes.

Estimated Tax Payment Deadlines

  • 2023 First Quarter: Deadline is April 15, 2023
  • 2023 Second Quarter: Deadline is June 15, 2023
  • 2023 Third Quarter: Deadline is September 15, 2023
  • 2023 Fourth Quarter: Deadline is January 15, 2024
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Just started the relationship with David Beck. What has stood out, was his grasp of the Tax Laws and his ability to clearly explain them to a non-CPA person. He gives you the confidence that he will do perform a great service for you.

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