Estimated tax Form 1040 ES
Income tax is a pay-as-you-go system. If you’re an employee, you pay federal withholding as a part of every paycheck. But if you’re self-employed, you might have to make quarterly estimated tax payments toward the amount you expect to owe the IRS or you might have an underpayment penalty. These payments should include both your income and self-employment taxes and are reported via Form 1040-ES. (This is different than the commonly-used IRS Form 1040.) Read on as we disclose the details…
Do you have more estimated tax and form 1040-ES questions? Check out our Guide to Gig Worker Taxes.
Can estimated tax payments be avoided?
If you’re wondering if you can avoid quarterly tax payments, the answer is yes, if you meet specific criteria. You will not have to pay estimated tax payments for the current year if, during the prior tax year:
- you had no tax liability,
- your tax year was 12 months, and
- you were a US citizen or resident alien.
If you have other income that includes W-2 wages, you might be able to withhold enough to cover self-employment taxes or additional income taxes to avoid IRS estimated tax payments. However, in some cases, you might still need to make estimated tax payments. For example, if you receive a substantial amount of taxable income not subject to withholding.
You might make estimated tax payments for taxable income that comes from:
- Stock sales
- Sale of house that does not qualify for the exclusion (If you sell a house you may pay tax on the gain and you may not. It all depends on if you qualify for the exclusion. (For more info see: Home Sale Exclusion, Tax Questions, Answered: The Tax Implications Of Selling Your Home).
When are estimated taxes due?
Estimated tax payments for 2023 are generally due:
- April 15, 2023
- June 15, 2023
- Sept. 15, 2023
- Jan. 15, 2024
You can make estimated tax payments using any of these methods:
- Apply your 2023 refund to your 2024 estimated tax.
- Mail a check or money order with Form 1040-ES: Estimated Tax for Individuals.
- Use the Electronic Federal Tax Payment System (EFTPS) to submit payments electronically. Visit www.eftps.gov or call 1-800-555-4477. You can make payments weekly, monthly, or quarterly. You can schedule payments up to 365 days in advance.
- You can learn more about credit card options at www.irs.gov. You might be charged a convenience fee for using your credit card.
When to file Form 1040-ES
You must make estimated tax payments and file Form 1040-ES if both of these apply:
- Your estimated tax due is $1,000 or more.
- The total amount of your tax withholding and refundable credits is less than the smaller of:
- 90% of your 2024 tax liability
- 100% of your 2023 tax liability
(Farmers and fishermen have different rules.)
Special rules exist for higher-income taxpayers. If your 2018 adjusted gross income (AGI) might be more than:
Special rules exist for higher-income taxpayers. Your 2023 adjusted gross income (AGI) might be more than:
- $150,000 if married filing jointly
If it is, you must prepay 110% instead of 100% of the 2023 tax. You’ll need to do this to avoid a possible underpayment penalty for 2024.
Use Form 1040-ES for estimated tax payments
To learn more, see Form 1040-ES instructions at www.irs.gov.
Have questions about estimated tax payments?
If you’re a small business owner, you may want help in with your estimated tax payment sand other small business tax issues. Rely on our team of small business certified tax pros to get your taxes right and keep your business on track. Find out how Block Advisors can help with your small business taxes.
Our small business tax professional certification is awarded by Block Advisors, a part of H&R Block, based upon successful completion of proprietary training. Our Block Advisors small business services are available at participating Block Advisors and H&R Block offices nationwide.
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