Form 1040-ES - Making Estimated Payments

Estimated Tax Payments refer to the advance payments of present tax liability depending on the wage holdings or installed payments of the taxpayer`s estimated tax liability. A taxpayer is required to pay 100% or 110% of the previous year`s final tax liability or 90% of the final tax liability to the IRS depending on the altered gross income to avoid being penalized. Income from self-employment, dividends, interests, rental income, alimony, prizes, awards, and the profits from sale of an asset are the primary sources of estimated payments. Similarly, where an individual`s withholding cannot cover the total amount unpaid tax at the end of the year, estimated payments may be made.

The payment of estimated payments by a taxpayer should be recorded on the individual`s tax return together with any other taxes withheld from their income sources. Any taxpayer, whether due on tax return refund or not, stands to be penalized in the event of a failure to pay the estimated tax payments or lacks adequate taxes withheld from their income.

Sole-proprietors, S corporation shareholders, self-employed persons expecting to owe $1000 or more taxes during the filing of tax returns are obligated to pay estimated taxes. Moreover, a taxpayer with a tax liability from the previous year may be needed to pay estimated tax payments for the present year.

How to Calculate Estimated Payments for the Upcoming Year

Estimates Calculator is efficient in calculating how much federal taxes a client ought to pay quarterly.

One can access Estimates Calculator from Form 1040 Main Menu by selecting:

• Payments, Estimates $ EIC

• Generate 20xx Estimates (20xx represents the upcoming tax year)

• Estimates Calculator

How to Create and Print Federal estimated tax payment vouchers for an upcoming year

From Taxx Savage Pro, one can generate the estimated tax payment vouchers from the Main Menu by selecting:

• Payments, Estimates & EIC

• Generate 20xx Estimates (1040-ES)

• Enter quarterly payments amount

• Select View at the toolbar to access the PDF document

•  Select File then Print

How to Set up estimated tax payments by direct debit

The IRS can facilitate direct debit of the estimated tax payments. The following steps indicate how to schedule estimated tax payments from Form 1040 Main Menu:

• Select Payments, Estimates & EIC
• Generate 20xx Estimates (1041-ES)
• Enter the quarterly payments amount
• Schedule 20xx Estimated Payments for E-File
• Select YES
• Dial the 9-digit routing number (RTN), account number then provide whether the account is a savings or a checking account.
• Edit if needed
•  Select Exit