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You May Need to Make Estimated Tax Payments If…

You may have to make estimated tax payments if you earn income that is not subject to withholding, such as income from self-employment, interest, dividends, alimony, rent, realized investment gains, prizes, and awards.

You also may have to pay estimated taxes if your income tax withholding on salary, pension, or other income is not enough, or if you had a tax liability for the prior year. Please consult a professional with tax expertise regarding your individual situation.1

HOW TO PAY ESTIMATED TAXES

If you are filing as a sole proprietor, a partner, an S corporation shareholder, and/or a self-employed individual and expect to owe taxes of $1,000 or more when you file a return, you should use Form 1040-ES, Estimated Tax for Individuals, to calculate and pay your estimated tax. You may pay estimated taxes either online, by phone, or through the mail.2

HOW TO FIGURE ESTIMATED TAX

To calculate your estimated tax, you must include your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year. Consider using your prior year’s federal tax return as a guide.

WHEN TO PAY ESTIMATED TAXES

For estimated tax purposes, the year is divided into four payment periods, each with a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty, even if you are due a refund when you file your income tax return.

Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in taxes after subtracting their withholdings and credits. They may also avoid the penalty if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.2

Trevor Randall, financial advisor in Long Beach

President and CEO of Randall Wealth Management Group

As a Certified Financial Planner® (CFP®) and Retirement Income Certified Professional® with over a 10 years of experience, Trevor Randall specializes in personalized retirement planning. As President and CEO of Randall Wealth Management Group, a family business established over 30 years ago, he prioritize hands-on care and detailed investment research to ensure every portfolio decision is accurate.

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