What are estimated tax payments?
Estimated tax is a way for people to make extra tax payments, which are totally separate from the taxes withheld from their paychecks. Most people don't make any estimated tax payments.
You might set up estimated tax payments if you have income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.
You may also set up estimated tax payments (paid directly to the IRS or via a payroll service) if you withheld federal taxes from wages you paid to household employees.
Unused credit amounts under the Inflation Reduction and CHIPS acts don't count as estimated payments.
If you don't pay enough through withholding or estimated tax payments, you may be charged a penalty. If you don't pay enough by the due date of each payment period, you may be charged a penalty even if you'll get a refund when you file your tax return.
You might set up estimated tax payments if you have income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.
You may also set up estimated tax payments (paid directly to the IRS or via a payroll service) if you withheld federal taxes from wages you paid to household employees.
Unused credit amounts under the Inflation Reduction and CHIPS acts don't count as estimated payments.
If you don't pay enough through withholding or estimated tax payments, you may be charged a penalty. If you don't pay enough by the due date of each payment period, you may be charged a penalty even if you'll get a refund when you file your tax return.
