For those of us who must pay estimated taxes, it’s that time again. The second payment is due June 15. As with your regular 1040, if you mail it, this filing of your 1040-ES just has to be "timely." That is, it doesn’t have to be in the IRS account by Friday, just postmarked by then.
Although the payments are referred to as quarterly, this second installment covers income you earned, but that didn’t have payroll taxes collected from, in April and May.
The estimated tax system obviously was devised by the same folks who came up with payroll taxes. Essentially, these four-times-a-year filings of
Form 1040-ES are the IRS’ way of making sure it gets its cut of your
money roughly as you earn it, rather than waiting for a lump sum in April. Yep, Uncle Sam certainly appreciates the potential earnings power of accrued interest.
So if you run your own business, either full-time like me or a small one on the side to boost your wage income, file a 1040-ES by the 15th. Same advice if you have investments that provide you with payments during the year. That’s taxable income. Even alimony, regardless of how small and inconsequential you think the amount from your ex is, represents an opportunity for the tax collector, and he wants his part of this nonpayroll, as yet untaxed money now.
Don’t put it off. Fill out your 1040-ES or, if you have an electronic account set up with the IRS, head to the EFTPS Web site today to schedule your payment. If you want to set up an electronic payment account, this blog item has some things to consider.
Either way, pay. Forget it, and you open the door for the IRS to charge you
penalties and interest if you end up owing too much when you do file
your annual return next year. Heck, the agency could come calling even if you underestimate and don’t pay enough
in each quarter.
So check out the instructions that are attached to the Form 1040-ES. Or, if you prefer more readable English, this story has details on the process, as well as some filing tips.
If you live in a state that also collects income taxes, you’ll like have this option requirement on that level, too.
And be sure to mark Sept. 15 on your calendar. That’s when estimated tax payment number three is due.
Lubna Kably
Hi Kay,
Aren’t they all the same. In India as well advance taxes are the norm. However, if you earn anything other than your salary income – say bank interest and know you will have to cough up more tax than what is deducted at source against your salary, you can declare the same and have your employer deduct a larger sum towards taxes from your monthly salary. This makes it a bit easier.