Estimated Tax Payments – who pays and how much do I owe?

15 Jun Estimated Tax Payments – who pays and how much do I owe?

As a female Certified Public Accountant located in Weaverville, NC, situated in the greater Asheville, NC market, it is very common for me to interface with start-up companies. These firms range from  solo-entrepreneurs to small and medium sized firms with multiple employes.  Regardless of which you are, it is crucial to remember that you are required to make estimated tax payments along the way.  Below I have highlighted some important details regarding when the taxes are due, how much you owe and how to remit payment.

Who is required to make estimated payments:

According to the IRS:

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.

If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return.

How much should my estimated tax payment be:  The calculation for your estimated tax payments takes into consideration a multitude of factors to include how much tax you owed last year, this years income to date, this years projected total income, this years expenses to date and this years projected total expenses for the year.  I suggest your check with your tax pro

How to make the payment:

1) You can mail in your payment into the IRS using the 1040-ES.  Your Certified Public Accountant will prepare these for you.  The form will include the correct address to mail your payments to.

2) You can pay directly online via the IRS Direct Pay Link  

According to the IRS website…Use this secure service to pay your individual tax bill or estimated tax payment directly from your checking or savings account at no cost to you. You’ll receive instant confirmation that your payment has been submitted. Bank account information is not retained in IRS systems after payments are made.

3) You can also use the EFTPS system via this link

According to the IRS website…EFTPS® is a secure government web site that allows users to make federal tax payments electronically. Every user must have a secure Internet browser with 128-bit encryption in order to access the site. To log on to the system, an enrolled user must be authenticated with three pieces of unique information: Taxpayer Identification Number (EIN or SSN), EFTPS® Personal Identification Number (PIN) and an Internet Password. The combination of these three pieces of identification adds to the security of the site and the privacy of taxpayer data.

4) Pay using a credit card.  Click this link for authorized companies

You can use any of the authorized companies in the above link.  Remember that there are fees associated with using either your debit or credit card.  The fees are listed beside the company’s contact information.   Debit cards range from $2.49 to $3.50 and Credit Cards range from 1.87% to 2.35% (subject to change).

Schedule of due dates for payment: