Estimated Tax Payments Due Today: How to Calculate and Pay Your Estimated Taxes
Created by Gemini AI.
Today is the deadline to make your third estimated tax payment to the IRS.
The estimated taxes are due four times during the year: on April 15, June 15, September 15, and January 15 of the following year. If the initial due date falls on a weekend or holiday, it falls on the next business day.
Making estimated tax payments is essential to staying compliant with tax laws and avoiding penalties. If you owe taxes to the IRS that aren't covered by tax withholding from your employee’s wages/salary or if you are self-employed and do not pay taxes via some withholdings, you may end up with an unexpected tax debt when you file your income tax return on April 15, which you will be unable to pay in full.
Unfortunately, many taxpayers believe that if they are employees, they do not have to pay estimated taxes throughout the year because they have federal income tax withholdings from their wages or salary. It is true, given your federal income tax withholdings are sufficient. Insufficient tax withholdings can result from (a) an incorrectly completed form W-4 that claims too many allowable exemptions, (b) an error in your employer’s payroll software that underestimates your annual tax liability, (c) the existence of other income in addition to your wages/salary and (d) other reasons,
Therefore, we recommend that you ensure that you pay the estimated tax even if you are an employee.
Consequences of Missing Your Estimated Tax Payment
Failing to make your estimated tax payments can lead to such consequences as:
Penalties: The IRS may charge a penalty if you underpay your taxes throughout the year. This penalty can increase the longer you go without paying.
Interest: If you fail to pay on time, you may also owe interest on the unpaid balance.
Collection Actions: Continued failure to pay can lead to unpaid tax balances for several years, resulting in more severe consequences, such as wage garnishments or tax liens.
IRS may Refuse to Approve Your Proposal to Resolve the Unpaid Taxes: The IRS has the right to refuse to approve a payment plan, an offer in compromise, or other alternative to their enforced collection because of the taxpayer’s continued failure to pay the estimated taxes.
How to Calculate Estimated Taxes
To determine how much estimated tax you owe, you can use Form 1040-ES. This form helps you estimate your income for the year, deductions, and any credits you may be eligible for.
The general rule is to pay at least
(a) 90% of the tax you expect to owe for the current year or
(b) 100% of the tax shown on last year's return.
Thus, if you estimate your current year’s tax liability could be greater than your last year’s tax liability due to an increase in your gross income and a relatively small change in your deductions, you may skip the steps below and calculate your estimated tax obligations based on your last years return and pay ¼ of that last year’s liability for each estimate tax due date. Otherwise, we recommend you follow the steps to calculate the estimated taxes described below.
Step-by-step process to calculate estimated tax payment due:
Estimate your income: Start by estimating your total income for the year.
Deduct credits and adjustments: Consider deductions, credits, and adjustments to income. You can use a prior year’s tax return to estimate the adjustments to your income.
Determine your tax liability: Use IRS tax tables to estimate the tax based on your income.
Subtract withholdings: Subtract any taxes withheld (for example, from your paycheck).
Divide by four: Estimated taxes are paid quarterly, so divide the amount by four.
You may have situations when your calculations of estimated tax payments show the greater amount due at the end of the year than at the beginning. This means you likely underpaid your estimated tax payments at the beginning of the year and need to “catch up” with your estimated tax payments by the next due date.
How to Pay Your Estimated Tax
The IRS offers several ways to make your estimated tax payment:
Online from the IRS Website (https://www.irs.gov/payments): Use IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS) for fast and secure payments. For online payments, you will need your bank account information. Credit card payments will require a credit card processing fee, which will make your payment greater than your actual estimated tax obligations.
Online Account with the IRS (https://www.irs.gov/payments/online-account-for-individuals): Individual online accounts with the IRS are excellent tools for reviewing tax balances, making tax payments, and obtaining tax records. If you do not have the Online If you do not have an account with the IRS but would like to pay the estimated taxes through your account, you need to plan in advance to allow time for opening and verifying your account before making a payment.
By Mail: Send a check or money order to the address stated in the IRS instructions to Form 1040-ES and determined based on the state of your residence. To ensure your payment is applied accurately, we recommend you send a completed Form 1040-ES along with your check. Additionally, you should write on your check’s Memo line your name, SSN, year, and form to which the payment should apply. Make sure your envelope with the payment is postmarked by the due date. Also, we recommend sending your payments by certified mail to ensure you have a record of a timely payment.
Final Thoughts
Making your estimated tax payments on time is crucial to avoid penalties and keep in good standing with the IRS. If you're unsure about how much to pay or how to make the payment, consider speaking with a tax professional who can guide you through the process.
Olena Ruth | Tax Defense Attorney
Olena represents the taxpayers in federal and state tax audits, collection matters, administrative appeals, and the U.S. Tax Court’s cases. She is actively engaged in Tax Sections of the American Bar Association and Colorado Bar Association. She serves as Colorado Bar Association’s pro-bono attorney and liaison to the Internal Revenue Service. Her speaking engagements include presentations on tax matters in family law, employment tax issues, and communication with the IRS.
Olena can be reached at olena@ruthtaxlaw.com
