Estimated Tax Payments
Estimated tax payments are quarterly tax payments made by individuals and businesses who expect to owe $1,000 or more in tax after subtracting withholding and credits.
Exam Tip
Due dates: 4/15, 6/15, 9/15, 1/15. Safe harbor: pay 100% of prior year tax (110% if AGI > $150K). Penalty for underpayment calculated per quarter.
What are Estimated Tax Payments?
Taxpayers who do not have sufficient tax withheld (self-employed, investors, retirees) must make quarterly estimated payments to avoid underpayment penalties.
Due Dates
| Quarter | Period Covered | Due Date |
|---|---|---|
| Q1 | Jan 1 - Mar 31 | April 15 |
| Q2 | Apr 1 - May 31 | June 15 |
| Q3 | Jun 1 - Aug 31 | September 15 |
| Q4 | Sep 1 - Dec 31 | January 15 |
Safe Harbor Rules
| Situation | Safe Harbor |
|---|---|
| AGI ≤ $150K | Pay 100% of prior year tax |
| AGI > $150K | Pay 110% of prior year tax |
| Alternative | Pay 90% of current year tax |
Exam Alert
Due dates: 4/15, 6/15, 9/15, 1/15. Safe harbor: 100% of prior year tax (110% if AGI > $150K) OR 90% of current year tax. Penalty is calculated per quarter, not annually. Threshold: $1,000 for individuals, $500 for corporations.
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Self-Employment Tax
Self-employment tax is the combined Social Security (12.4%) and Medicare (2.9%) tax that self-employed individuals pay on net earnings from self-employment, totaling 15.3%.
Filing Status
Filing status is a classification that determines a taxpayer's tax rate schedule, standard deduction amount, and eligibility for certain credits and deductions, with five options: Single, MFJ, MFS, HOH, and QSS.
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