Estimated tax is a method of paying taxes on income that is not subject to withholding. Furthermore, suppose you do not choose voluntary withholding. In that case, you must make estimated tax payments on other taxable income, such as unemployment compensation and the taxable portion of your social security benefits. According to the IRS's annual schedule, taxes are typically paid in four equal installments. Although they are commonly referred to as quarterly payments, the deadlines are not always three months apart or cover three months of income.
Self-employed or gig workers are frequently required to make estimated payments 2022. Similarly, investors, retirees, and others commonly need to make these payments because a significant portion of their income is not subject to withholding. Interest, dividends, capital gains, alimony, and rental income are examples of non-withholding income. Paying quarterly estimated taxes usually reduces, if not eliminates any penalties. Farmers and fishers, casualty and disaster victims, those who recently became disabled, recent retirees, and those who receive income unevenly throughout the year are all exempt from the penalty and subject to special rules. Here are some lists about what are estimated tax payments in 2022.
How to Make Estimated Tax Payments:
Estimated Tax for Individuals contains instructions to assist taxpayers in calculating their estimated taxes. The IRS Online Account is the best way to make a payment. Taxpayers can view their payment history, pending charges, and other useful tax information on this page. Taxpayers can pay their estimated taxes using IRS Direct Pay, a debit card, credit card, digital wallet, or the Treasury Department's Electronic Federal Tax Payment System. If paying by check, taxpayers should make their check payable to United States Treasury. Additional information, including worksheets and examples, can be found in Publication 505, Tax Withholding, and Estimated Tax. This publication is especially useful for those who have dividend or capital gain income, owe alternative minimum tax or self-employment tax, or have other special circumstances.
Creating an Estimated Tax Payment:
To compute your estimated tax expenses, employ Form 1040-ES today. Begin by calculating your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year. The instructions for Form 1040-ES include a worksheet to assist you. You can also get a general idea from your previous year's tax return. What you ultimately want is an estimate of your expected annual income.
If your estimate is too high, recalculate your estimated tax for the next payment using another Form 1040-ES worksheet. Similarly, if your assessment is too low, return to the Form 1040-ES worksheet to revise your next estimated tax payment. You should also recalculate if your situation changes or if tax law changes affect your tax liability for the year.
Penalties for Failure to Estimate Taxes:
You could face a penalty if you don't pay enough tax throughout the year, whether you make estimated tax payments or rely on withholding. You can also avoid the penalty if your withholding or estimated tax payments in 2022 equal at least 90% of your 2022 tax liability or 100% of the tax shown on your 2021 return.
When are the 2022 estimated taxes due?
Estimated taxpayers have a slightly different filing schedule than everyone else. Self-employed individuals and those working in similar entrepreneurial or independent contractor jobs are among those who pay quarterly estimated taxes. This requirement applies if your paycheck does not have income taxes deducted before it is delivered to you. Estimated payments 2022 are due quarterly and must accompany Form 1040-ES. These expenses are unpaid on the next dates:
Payments for the first quarter will be made on April 18, 2022.
Payments for the second quarter will be made on June 15, 2022.
Payments for the third quarter will be made on September 15, 2022.
Payments for the fourth quarter will be made on January 17, 2023.
Parting words:
Finally, unless you live in a state with no income tax, you are likely to owe estimated tax payments to your state as well. Due dates for state payments may or may not coincide with federal dates, so check with your state's appropriate tax agency.
Also read -5 little-known tax deductions that could save you big
x
Comments
Post a Comment