Bible Money Matters

Christian personal finance

Menu
    • About
    • Archives
    • Contact
    • Close
  • Making Money
      • Popular Articles

        • 50 Ways To Make Money: Maximizing, Creating And Increasing Your Income
        • 10 Weird And Unconventional Ways To Make Money
        • Making Money With A Blog (e-Book)
        • 10 Places To Sell Or Trade Your Unused (Or Broken) Electronics
        • Ways To Make Extra Money Series: 20 More Income Generating Ideas From Our Readers
        • Making Side Income Can Help Blunt The Impact Of Becoming A One Income Family
        • Earn Cash Back With Discover it® Credit Card
      • Recent Articles – Making Money

        • Best Sites Like Fiverr To Make Money As A Freelancer
        • 13 Of The Best Independent Contractor Jobs
        • 25 Of The Best Gig Economy Jobs
        • How To Make Money Blogging: Turn A Blog Into A Business
      • Categories

        • Making Money
        • Investing
        • Retirement
        • Jobs & Work LIfe
        • Money
        • Income
    • Close
  • Saving Money
      • Popular Articles

        • 50 Easy Ways To Save Money Every Month
        • 10 Weird And Unconventional Ways To Save Money
        • 10 Practical Ways To Save Money And Increase Your Net Worth
        • How To Save Money On Just About All Of Your Regular Monthly Bills
        • Ways To Watch TV Without Paying An Arm And A Leg For Cable TV
        • Save Money On Your Hospital Bill - Just By Asking
      • Recent Articles – Saving Money

        • How To Save $100k In 7 Practical Steps
        • Stairs App Review: Save And Invest To Earn 4-6% Interest
        • Honey Review: Save Money Automatically When You Shop Online
        • 9 Convincing Reasons Why You Need An Emergency Fund
      • Categories

        • Saving Money
        • Frugality
        • Planning
        • Finance
        • Saving For Retirement
        • Savings Accounts
    • Close
  • Banking
      • Best Rates For 2019

        • Best Credit Cards
        • Best Savings Accounts
        • Best Mortgage Rates
        • Best CD Rates
        • Best Brokerages
        • Free Credit Scores
      • Recent Reviews

        • TradeStation Review: Commission Free Stock And ETF Trades
        • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
        • Cadre Real Estate Investing Review: Commercial Real Estate Investing
        • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
      • Categories

        • Bank & Software Reviews
        • Investing
        • Credit
        • Banking
        • Mortgage
        • Insurance
        • Family Budget
    • Close
  • Recommended
  • Video
    • Close

Estimated Tax Payments: How They Work, When They’re Due And Why You Should Pay Them

By Peter Anderson Leave a Comment - The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited April 5, 2013.

Share11
Pin2
Tweet24
Share5
42 Shares

If you’re self employed or if you have significant side income you most likely should be paying estimated taxes on the income throughout the year in order to avoid paying penalties come tax  time.  Our tax system is a pay as you go system, so if you’re making enough money to warrant it,  you should be paying taxes throughout the year.

This past year I paid just enough in estimated taxes in order to satisfy the IRS safe harbor requirements, but come tax time I had underestimated how much I would owe in total in taxes, and ended up with a huge tax bill (in excess of $5000).

estimated tax details

If you’re smart you’ll avoid doing what I did and make sure to accurately track how much income you’re making throughout the year and pay enough in federal, state and self employment taxes in order to not have to pay more than expected come tax time.

Today I want to take a look at estimated taxes, and talk about how they work, when they’re due and why you should be paying them.

Quick Navigation

  • Estimated Tax Payments: Who Should Pay Them?
  • Paying Your Estimated Taxes
  • Due Dates For Estimated Tax Payments
  • State Estimated Tax Payments And Self Employment Tax Due Also
  • More Estimated Tax Information

Estimated Tax Payments: Who Should Pay Them?

People who work for an employer and receive a paycheck would normally have their taxes withheld from their paycheck, and their employer pays their taxes for them.  If, however, the amount that is being withheld isn’t enough because you have income from investments, from side or part time jobs, or if you have income that isn’t subject to withholding, you might need to think about making estimated tax payments.

If you don’t want to have to pay penalties when tax time rolls around you’ll need to make sure that you’re estimating your income for the year and meeting one of the IRS safe harbor requirements to avoid penalties.   To avoid penalties, do one of the 3 following things:

  1. Owe less than $1,000 for this year’s taxes.
  2. Withhold 100% of last year’s tax liability.
  3. Withhold 90% of this year’s tax liability.

You can meet the tax payment and safe harbor requirements by adjusting your tax withholding at your job, by making estimated tax payments, or both if you so choose.  For example, if you figure out in the fourth quarter that you haven’t paid enough in estimated tax payments, you can increase your withholding at your job in order to meet safe harbor requirements.

Last year we did #2 from the above list and withheld 100% of our previous year’s tax liability in order to avoid penalties.   Although we avoided penalties, we did have a big tax bill come April because our income was substantially higher than the previous year.

Paying Your Estimated Taxes

Paying estimated taxes can be a bit confusing the first couple of times that you do it, but it gets easier.  The first payment is due on April 15th (or whatever day the personal income tax filing deadline is).  To figure out and pay your estimated taxes you can follow this process:

  1. Complete the estimated tax worksheet, Form 1040-ES: Download  Form 1040-ES from the IRS website and fill in the form to figure out how much you should pay.   Some information that you’ll need handy when you fill complete the form  include your previous year’s AGI (Adjusted Gross Income), deductions that you took, Net Income, etc. If the paper form seems a bit too confusing for you, a lot of the popular tax software will calculate and print out estimated tax coupons for you to use in paying your estimated taxes. I used TurboTax this past year, and it gave me payment coupons for federal and state estimated taxes due.  I just keep those in our file and reference them when payments come due.  For more detailed help or answer to frequently asked questions, check out Publication 505, Tax Withholding and Estimated Tax.
  2. Make your estimated tax payment, online or in the mail!  If you haven’t already, sign onto the Electronic Federal Tax Payment System (EFTPS), and you can make your estimated tax payments online via direct bank debit.  Make sure you don’t do this at the last minute because you’ll need a PIN to access the site, and it’ll take 15 days or more to arrive in the mail when you sign up. If you haven’t signed up for EFTPS in time, just find the paper payment coupon in Form 1040-ES, and mail that in along with your estimated tax payment.  To make state estimated tax payments check with your local state to see if they accept online payments.

Due Dates For Estimated Tax Payments

Estimated tax payments need to be made 4 times a year in April, June, September and January.  One thing that often confuses people is that the payments are spaced unevenly, not every three months like some people assume.   They are spaced out 2 months, 3 months and 4 months apart.

  • April 15 (same as tax filing day for personal income taxes)
  • June 15
  • September 15
  • January 15

State Estimated Tax Payments And Self Employment Tax Due Also

Not only are federal taxes due on the dates mentioned above, but you’ll also need to pay your state estimated taxes as well as self employment taxes. While the self employment taxes for social security and Medicare are usually 15.3%, for 2011 and 2012 they have been cut by 2%, and are 13.3%.

So that means for 2012 you’re paying 10.4% for Social Security and 2.9% for Medicare.  Unless something is done to extend the 2% payroll tax cut, the self employment tax will go back up to 15.3% in 2013.

More Estimated Tax Information

Need more detailed information about your estimated taxes? Check out the IRS resources listed below.

  • IRS: Estimated Tax Information From IRS
  • IRS: Publication 505, Tax Withholding and Estimated Tax
  • IRS: Estimated Tax Form 1040-ES

Are you making estimated tax payments this year, or have you in past years? Do you find them confusing?

Related Posts

  • Important Tax Rules For The Self Employed: Payments Are Coming Due!

    The IRS defines a self employed person as one who: Carries on a trade or business as a sole proprietor Is an independent contractor Is…

  • First Quarter Estimated Tax Payment Is Due On April 15th. Make Your Payment Now!

    Tax day is creeping up on us again. Most people are in the middle of filing their 2009 tax returns, however, if you have self…

  • Quarterly Estimated Tax Payments For Self Employment Income Are Coming Due!

    Since I've started blogging and collecting a small amount of income for doing it,  I've had to start paying quarterly estimated taxes for the money…

Share11
Pin2
Tweet24
Share5
42 Shares
Last Edited: 5th April 2013 The content of biblemoneymatters.com is for general information purposes only and does not constitute professional advice. Visitors to biblemoneymatters.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.

This article is about: Taxes

About Peter Anderson

Peter Anderson is a Christian, husband to his beautiful wife Maria, and father to his 2 children. He loves reading and writing about personal finance, and also enjoys a good board game every now and again. You can find out more about him on the about page. Don't forget to say hi on Pinterest, Twitter or Facebook!

Share Your Thoughts: Cancel reply

Previous Post: Buy Quality To Save Money In The Long Run
Next Post: Why An Emergency Fund Is Important: A Frozen AC Unit, Puddles And A Big Repair Bill
Discover Investment Platforms

Popular Posts

  • 21 Easy Ways To Earn Free Amazon Gift Cards
  • 10 Best Free Tax Filing Services And Software Online
  • 21 Apps That Pay You Real Money Fast
  • 17 TV Apps And Live TV Streaming Services To Watch TV Free
  • 30 Legit Online Jobs That Pay Well
  • 37 Easy Ways To Get Free Gift Cards
  • How To Get Free Stock
  • 40 Easy Ways To Get Free Money Fast
  • 21 Places To Read Free Books Online
  • 24 Legit Online Jobs
  • 17 Best Work From Home Jobs: A List Of Legit Online Jobs That Pay Well

Recent Posts

  • How To Save $100k In 7 Practical Steps
  • How to Save Money When Remodeling A Home
  • How To Hire A Contractor For Your Remodeling Project
  • Remembering 9/11 Years Later: Where Were You On That Fateful Day?
  • TradeStation Review: Commission Free Stock And ETF Trades
  • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
  • Cadre Real Estate Investing Review: Commercial Real Estate Investing
  • Best Sites Like Fiverr To Make Money As A Freelancer
  • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
  • 30 Quotes About Easter And Resurrection: He Is Risen!

Disclaimer

The information contained in BibleMoneyMatters.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation.

In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.

Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.

Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates.

We respect your privacy: Privacy Policy.

Thanks for visiting!

Bible Money Matters - Seen On These Sites and more..
Bible Money Matters is a personal finance, entrepreneurship and investing community. Give more, save more and live more.

Copyright © 2023 · Bible Money Matters | Sitemap | Advertise | Privacy Policy