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Estimated Tax Payments

If your income is not subject to withholding, you may need to pay estimated taxes. Usually, corporations and those who are self-employed pay estimated payments because they have no one designated to withhold taxes from their income. Estimated taxes may also be paid on income from rent, interest, dividends, alimony, prize money, and gains from the sale of assets.

Those working for an employer get their taxes withheld from their paycheck. If they have other sources of income for which they must pay tax, they can also make estimated payments to the IRS.

Who Must Pay

If you are self-employed, a sole proprietor, partner, and/or an S corporation shareholder, you are required to pay estimated tax payments if you expect to owe $1000 or more when you file your tax return.

If you are a corporation, you are required to pay estimated tax payments if you expect to owe $500 or more in taxes when you file your return.

September 15 Payment Deadline

Estimated taxes are paid quarterly. The four due dates in 2015 fall on:

  1. April 15, 2015 (for period January 1 to March 31)
  2. June 15, 2015 (for period April 1 to May 31)
  3. September 15, 2015 (for period June 1 to August 31)
  4. January 15, 2016 – of the next year (for period September 1 to December 31)

September 15 is the last day for making the third quarterly payment for June 1 to August 31, 2015. If you haven’t yet made the payment, you can use IRS Direct Pay. You can pay with your debit or credit card, or transfer the money directly from your bank account. You can schedule future payments in advance on IRS Direct Pay.

If You Don’t Pay

If you do not pay enough in estimated taxes over the course of the year, you may have to pay a penalty for underpayment of estimated tax when you file your annual tax return. Most are able to avoid this penalty by owing $1,000 or less at the end of the tax year, paying at least 90% of taxes due for the year, or 100% of the taxes shown for the previous year.

If taxes remain unpaid after April 15th, the IRS considers them to be delinquent. The IRS charges a penalty and interest on the amount until it is paid in full (with penalties and interest). They may also initiate collection actions such as a lien or levy.