June 15 deadline for estimated second quarter tax payments is approaching

WASHINGTON, DC (KVOA) – The Internal Revenue Service reminds taxpayers who pay estimated taxes that they have until June 15 to pay their estimated tax for the second quarter of the 2021 tax year without penalty.

Estimated tax is the method used to pay tax on income that is not subject to withholding tax. This includes self-employment income, interest, dividends, rents, earnings from the sale of assets, prizes and rewards. You may also have to pay an estimated tax if the amount of income tax withheld from your salary, pension or other income is not sufficient.

Who has to pay the estimated tax?

Individuals, including sole proprietors, partners, and shareholders of S corporations, are generally required to make estimated tax payments if they expect to owe tax of $ 1,000 or more when they file their return.

Individual taxpayers can use the IRS interactive tax assistant online to see if they are required to pay estimated taxes. They can also refer to the Form 1040-ES, Estimated Tax for Individuals worksheet for details on who should pay the estimated tax.

Corporations are generally required to make estimated tax payments if they expect to owe tax of $ 500 or more when they file their return. Corporations can refer to Form 1120-W, Estimated Corporate Tax for more information.

Special rules apply to certain groups of taxpayers, such as farmers, fishermen, certain high-income taxpayers, the injured and the disaster victims, the recently disabled, the recent retirees and those who receive unequal income during of the year.

Publication 505, Withholding Tax and Estimated Tax, has additional details, including worksheets and examples, which may be particularly useful for those with dividend or capital gains income who owe minimum tax. replacement or self-employment tax, or have other special situations.

Taxes are paid as and when

This means that taxpayers have to pay most of their taxes owed during the year as the income is collected. There are two ways to do this:

Deductions from wages, pensions or certain government payments such as social security

· Make quarterly tax payments estimated during the year.

Taxpayers can avoid an underpayment penalty by paying less than $ 1,000 when taxed or by paying most of their taxes during the year. Typically, for 2021, this means making payments of at least 90% of the tax expected on their 2021 return. Most taxpayers who pay at least 100% of the tax stated on their return for the year of Taxation 2020 can also avoid the penalty. There are special rules for farmers and fishermen, some employer households and some high income taxpayers. For more information, see Form 1040-ES.

Generally, taxpayers should make estimated tax payments in four equal amounts to avoid a penalty. However, if they receive income unevenly throughout the year, they may be able to vary the payment amounts to avoid or reduce the penalty using the annualized payment method. Taxpayers can use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts to see if they owe a penalty for underpaying their estimated tax.

Third quarter payments are due September 15, and the last estimated tax payment for the 2021 tax year is due January 17, 2022.

Withholding tax estimator

If a taxpayer receives wages and salaries, he can avoid having to pay an estimated tax by asking his employer to withhold more tax from his income. To do this, they would submit a new W-4 form to their employer.

If a taxpayer receives a paycheck, the withholding tax estimator can help them make sure they have the correct amount of tax withheld from their payroll.

Withholding Tax Estimator offers workers, as well as retirees, self-employed and other taxpayers a clear, step-by-step method to effectively verify their withholding to protect against too low withholding tax and against an unexpected tax bill or penalty at tax time next year.

How to Pay Estimated Taxes Form 1040-ES, Estimated Taxes for Individuals, includes instructions to help taxpayers calculate their estimated taxes.

The fastest and easiest way for individuals to make an estimated tax payment is to use IRS Direct Pay from their checking or savings account or to pay using a debit or credit card . Taxpayers should note that the payment processor, not the IRS, charges a fee for debit and credit card payments. Direct payment and debit or credit card payment options are available online at IRS.gov and through the IRS2Go app.

Taxpayers can also use the Electronic Federal Tax Payment System (EFTPS) to make an estimated tax payment.

Corporations must use electronic funds transfer to complete all federal tax filings (such as employment, excise, and corporate income tax filings). This includes the estimated tax installments. Typically, electronic funds transfer is done using the Federal Tax Electronic Payment System (EFTPS). However, if the company does not wish to use EFTPS, it can ask its tax professional, financial institution, payroll or other trusted third party to conduct electronic filings on its behalf.

If taxpayers choose to send a check or money order, they should be made payable to the “United States Treasury.”

Source link

Previous Here. The street market offers a "happy" moment, the opportunity to present the city center
Next The surge in US job openings in April raises the dollar, barely

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *