Estimated Payments – Keep 2015 In Mind When Filing 2014 Taxes

If you don’t already know what estimated tax payments are, they are payments you make to the government based on what you think your tax liability will be for that tax year. Estimated tax payments are normally due 4 times throughout the year. For example, for the 2015 tax year, you should submit estimated payments on April 15, 2015, June 15, 2015, September 15, 2015, and January 15, 2016. You do not have to make your January 15 estimated payment if you file your tax return by February 1, 2016 and pay the entire balance due with your tax return. While I am discussing the 2015 tax year, these rules regarding your estimated payments have been fairly consistent over the years, and have not changed significantly.

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http://pixgood.com/empty-piggy-bank.html

If you do not receive a W-2, for example, if you are self-employed, an S-Corp shareholder, a partner in a partnership, etc., then you may have to submit estimated tax payments throughout the year. If you receive a W-2, you may not need to make estimated payments because you can adjust the amount of withholding so it is already taken care of when you receive your paycheck.

Estimated tax payments are important to consider because if you do not pay in enough throughout the year, the IRS could charge you a penalty when you submit your tax return. A penalty can be charged for a variety of reasons. The two most common are if you fail to pay your estimated payments or if you pay them after the date they were due. It is still possible to get a penalty even if you are receiving a refund. But how do you know what your estimated payments are or should be?

When you file your tax return for the 2014 tax year, estimated payments for the 2015 tax year will be calculated based on what your tax liability was for the 2014 tax year. For 2015, you can use the estimated tax worksheet to calculate what estimated payments you should be making. If you pay a CPA to file your taxes, you should make sure to inform them if your income, withholding, or deductions could be changing in the next tax year. For instance, if you are switching jobs and will be earning a higher salary, that could bump up your income during the next year. If you are having a baby in the next year, that could bump up your exemptions which reduces your tax. All of these factors play in to the amount that will be calculated for your estimated tax liability the next year, so it is important to take all of these things into consideration.

http://taxes.about.com/od/taxplanning/ht/estimated_taxes.htm
http://taxes.about.com/od/taxplanning/ht/estimated_taxes.htm

There are instances when you do not have to pay estimated tax. Per the IRS, you do not have to make estimated tax payments if you had zero tax liability in the prior year, that prior year consisted of 12 months, and you were a U.S citizen or resident for that whole year. If you expect to owe $1,000 in taxes in the next year, generally you need to make estimated payments.  There are also a few different ways to pay your estimated payments. One way is by mailing in your check or money order with a voucher to your designated IRS location. Click here to see where you should send your payments. You can also pay via phone using a credit card or debit card. Lastly, you can use Direct Pay through the IRS and pay online.

If you need help deciding what your estimated payment should be or figuring out what your 2015 tax will be, please leave a comment below or shoot me an email at ellen.christine.carstensen@gmail.com! Thanks for reading!

 

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