As a freelancer or small business owner, it’s important to make estimated tax payments throughout the year to avoid penalties and interest from the IRS. To make estimated tax payments in 2023, you’ll need to estimate your income, deductions, and credits for the year, and use Form 1040-ES to calculate the amount you need to pay. You can then make payments online through the Electronic Federal Tax Payment System (EFTPS), using a credit or debit card, or by mailing a check or money order. Estimated tax payments are due on April 15th, June 15th, September 15th, and January 15th of the following year, but keep in mind that these dates may change if they fall on a weekend or holiday.
What Are Estimated Tax Payments?
Estimated tax payments are payments made throughout the year to cover your income tax liability. These payments are made on a quarterly basis, and they are required if you expect to owe at least $1,000 in federal income tax for the year. Estimated tax payments are typically made by freelancers, self-employed individuals, and small business owners who do not have taxes withheld from their income.
How Much Should You Pay?
The amount you should pay in estimated tax payments depends on your expected income for the year, as well as any deductions or credits you plan to claim. To calculate your estimated tax payments, you’ll need to estimate your total income, deductions, and credits for the year. You can use the IRS Form 1040-ES to help you calculate your estimated tax payments. You may also want to consider working with a tax professional to ensure you’re paying the correct amount.
When Are Payments Due?
Estimated tax payments are due on a quarterly basis throughout the year. The due dates for these payments are:
- April 15th (for income earned from January 1st to March 31st)
- June 15th (for income earned from April 1st to May 31st)
- September 15th (for income earned from June 1st to August 31st)
- January 15th of the following year (for income earned from September 1st to December 31st)
It’s important to note that these due dates may change if they fall on a weekend or holiday. In those cases, the due date will be the next business day.
How to Make Estimated Tax Payments
There are several ways to make estimated tax payments, including:
- Online Payment – The IRS accepts online payments through their Electronic Federal Tax Payment System (EFTPS). To use this service, you’ll need to enroll and provide your bank account information. You can make a one-time payment or set up automatic payments.
- Credit or Debit Card – You can also make estimated tax payments using a credit or debit card. The IRS has authorized several payment processors to accept these payments on their behalf. However, keep in mind that these processors may charge a convenience fee.
- Check or Money Order – You can also make estimated tax payments by mail using a check or money order. To do so, you’ll need to fill out Form 1040-ES and mail it to the address listed on the form.
Frequently Asked Questions
You can pay all of your estimated tax by April 18, 2023, or in four equal amounts by the dates shown below. * You don’t have to make the payment due January 16, 2024, if you file your 2023 tax return by January 31, 2024, and pay the entire balance due with your return.
If you expect to owe at least $1,000 in federal income tax for the year and do not have taxes withheld from your income, you are required to make estimated tax payments.
Failure to make estimated tax payments can result in penalties and interest. The IRS may also require you to pay the full amount of your tax liability by the due date of your tax return.
If your income changes during the year, you can adjust your estimated tax payments accordingly. You can do this by filing a new Form 1040-ES or by making the adjustments online through EFTPS