Some taxpayers earn income not subject to withholding. For small business owners and self-employed people this can mean making quarterly estimated tax payments.
Anyone in this situation should check their withholding using the Tax Withholding Estimator on IRS.gov. If the estimator suggests a change, the taxpayer can submit a new Form W-4 to their employer.
Here are some important things taxpayers should know about estimated tax payments:
- Taxpayers generally must make estimated tax payments if they expect to owe $1,000 or more when they file their 2020 tax return.
- Aside from business owners and self-employed individuals, people who might also need to make estimated payments include sole proprietors, partners and S corporation shareholders. It also often includes people involved in the sharing economy.
- Estimated tax requirements are different for farmers and fishermen.
- Corporations generally must make these payments if they expect to owe $500 or more on their 2019 tax return.
The remaining deadlines for paying 2020 estimated taxes are September 15, 2020 and January 15, 2021.
- Taxpayers can review these forms for help figuring their estimated payments:
- Taxpayers have options for paying estimated taxes. These include:
Taxpayers who don’t pay enough tax throughout the year may have to pay an underpayment penalty.