Estate Planning and Tax Lawyer Blog

Estimated tax is a method used to pay tax on income that is not subject to withholding. You may need to pay estimated taxes during the year depending on what you do for a living and what type of income you receive. These following tips from the IRS will offer a quick look at estimated taxes and how to pay them.

You may have to pay estimated tax if you have income from sources such as self-employment, dividends, interest, rent, alimony, gains from the sale of assets, prizes or awards. Generally, you must pay estimated taxes in 2011 if both of the following apply: 1) you expect to owe at least $1,000 in tax after subtracting your tax withholding and credits, and 2) you expect your withholding and credits to be less than the smaller of 90% of your 2011 taxes or 100% of the tax on your 2010 return. Special rules apply for fisherman, farmers, certain household employers and certain higher income taxpayers. Sole Proprietors, Partners and S Corporations generally have to make estimated tax payments if expected to owe $1,000 or more in tax when filing your return. Use the worksheet in Form 1040ES to figure your estimated tax, including your expected gross income, taxable income, taxes, deductions and credits for the year. To avoid any penalties, be as accurate as possible. All you need to know to pay estimated taxes is provided on Form 1040ES, including instructions, worksheets, schedules, and payment vouchers. This can be going at http://www.irs.gov.