Estimated Tax Payments


HI, I’M BECKI AND I WORK FOR THE
INTERNAL REVENUE SERVICE. OUR INCOME TAX RUNS ON A
PAY-AS-YOU-GO BASIS. THAT MEANS, WE PAY OUR TAXES
AS WE EARN OR RECEIVE INCOME DURING THE YEAR, EITHER BY
HAVING TAXES WITHHELD OR BY MAKING QUARTERLY ESTIMATED
TAX PAYMENTS. IF YOU HAVE INCOME THAT’S NOT
SUBJECT TO WITHHOLDING, YOU PROBABLY NEED TO MAKE
THESE QUARTERLY PAYMENTS. THIS INCLUDES, BUT IS NOT
LIMITED TO, SELF-EMPLOYMENT INCOME, INTEREST,
DIVIDENDS, PRIZES,
AND RENTAL INCOME. IT MAY ALSO INCLUDE SHARING
ECONOMY INCOME OR OTHER ACTIVITIES WHERE YOU ARE NOT
AN EMPLOYEE, SUCH AS INCOME YOU EARN
BY RENTING A SPARE BEDROOM OR OTHER SCENARIOS. GENERALLY, THIS INCOME IS
TAXABLE EVEN IF YOU DON’T RECEIVE AN INCOME STATEMENT. NORMALLY, YOU PAY ESTIMATED
TAX IN FOUR EQUAL QUARTERLY PAYMENTS USING FORM 1040-ES. THERE ARE SOME EXCEPTIONS. HERE’S THE BOTTOM LINE. IF YOU EXPECT TO OWE
AT LEAST $1,000, YOU MAY NEED TO MAKE
ESTIMATED TAX PAYMENTS. AND IF YOU PAY TOO LITTLE
TAX DURING THE YEAR, YOU MAY HAVE TO
PAY A PENALTY. SO, IF YOU HAVE TAXABLE INCOME
FROM ANY PAYER THAT DOESN’T WITHHOLD TAX FOR YOU, CHECK
TO SEE IF ESTIMATED TAXES APPLY IN YOUR SITUATION. GO TO
IRS.GOV/PAYASYOUGO, TO DETERMINE IF YOU
NEED TO SET UP QUARTERLY ESTIMATED TAX
PAYMENTS OR TO CONSIDER INCREASING YOUR WITHHOLDING
IF YOU HAVE AN EMPLOYER.

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