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Free income tax service Index Symbols $10,000, pagos en efectivo en exceso de, Introducción A Asistencia (see Ayuda con los impuestos) Ayuda (see Ayuda con los impuestos) Ayuda con los impuestos, Cómo Obtener Ayuda con los Impuestos D Defensor del Contribuyente, Servicio del Defensor del Contribuyente. Free income tax service F Formulario, ¿Quién tiene que presentar el Formulario 8300-SP? 8300-SP, ¿Quién tiene que presentar el Formulario 8300-SP? I Información adicional (see Ayuda con los impuestos) Informe de pagos en efectivo en exceso de $10,000, Introducción P Publicaciones (see Ayuda con los impuestos) Q Qué Hay de Nuevo, Qué Hay de Nuevo S Servicios gratuitos para los impuestos, Servicios gratuitos para los impuestos. Free income tax service T Transacciones en efectivo en exceso de $10,000, Introducción Prev  Up     Home   More Online Publications
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Estimated Taxes

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Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

How to Pay Estimated Tax

If you are filing as a sole proprietor, partner, S corporation shareholder and/or a self-employed individual, you should use Form 1040-ES, Estimated Tax for Individuals (PDF), to figure and pay your estimated tax. For additional information on filing for a sole proprietor, partners, and/or S corporation shareholder, refer to Publication 505, Tax Withholding and Estimated Tax.

If you are filing as a corporation you should use Form 1120-W, Estimated Tax for Corporations (PDF), to figure the estimated tax. You must deposit the payments. For additional information on filing for a corporation, refer to Publication 542, Corporations.

Who Must Pay Estimated Tax

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.

If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return.

If you had a tax liability for the prior year, you may have to pay estimated tax for the current year. See the worksheet in Form 1040-ES (PDF) for more details on who must pay estimated tax.

Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings. To do this, file a new Form W-4 (PDF) with your employer. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.

You do not have to pay estimated tax for the current year if you meet all three of the following conditions.

  • You had no tax liability for the prior year
  • You were a U.S. citizen or resident for the whole year
  • Your prior tax year covered a 12 month period

You had no tax liability for the prior year if your total tax was zero or you did not have to file an income tax return. For additional information on how to figure your estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

Estimated tax requirements are different for farmers and fishermen. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules.

How To Figure Estimated Tax

To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.

When figuring your estimated tax for the current year, it may be helpful to use your income, deductions, and credits for prior year as a starting point. Use your prior year's federal tax return as a guide. You can use the worksheet in Form 1040-ES (PDF) to figure your estimated tax. You will need to estimate the amount of income you expect to earn for the year. If you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter. If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated tax for the next quarter. You want to estimate your income as accurately as you can to avoid penalties.

You must make adjustments both for changes in your own situation and for recent changes in the tax law.

When To Pay Estimated Taxes

For estimated tax purposes, the year is divided into four payment periods. Each period has 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, see underpayment of tax below for more information.

Using the EFTPS system is the easiest way to pay your federal taxes for individuals as well as businesses. Make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement and estimated tax payments using Electronic Federal Tax Payment System (EFTPS). If it is easier to pay your estimated taxes weekly, bi-weekly, monthly, etc. you can, as long as you have paid enough in by the end of the quarter. Using EFTPS, you can access a history of your payments, so you know how much and when you made your estimated tax payments.

Underpayment of Estimated Tax

If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or 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. There are special rules for farmers and fishermen. Please refer to Publication 505 Tax Withholding and Estimated Tax, for additional information.

However, if your income is received unevenly during the year, you may be able to avoid or lower the penalty by annualizing your income and making unequal payments. Use Form 2210 (PDF), Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you owe a penalty for underpaying your estimated tax. Please refer to the Form 1040 Instructions (PDF) or the Form 1040A Instructions for where to report the estimated tax penalty on your return.

The penalty may also be waived if:

  1. The failure to make estimated payments was caused by a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or
  2. You retired (after reaching age 62) or became disabled during the tax year for which estimated payments were required to be made or in the preceding tax year, and the underpayment was due to reasonable cause and not willful neglect.

You should also use Form 2210 (PDF) to request a waiver of the penalty for the reasons shown above.

Page Last Reviewed or Updated: 31-Oct-2013

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Free income tax service 7. Free income tax service   Ship Passenger Tax Table of Contents A tax of $3 per passenger is imposed on certain ship voyages, as explained later under Taxable situations. Free income tax service The tax is imposed only once for each passenger, either at the time of first embarkation or disembarkation in the United States. Free income tax service The person providing the voyage (the operator of the vessel) is liable for the tax. Free income tax service Voyage. Free income tax service   A voyage is the vessel's journey that includes the outward and homeward trips or passages. Free income tax service The voyage starts when the vessel begins to load passengers and continues until the vessel has completed at least one outward and one homeward passage. Free income tax service The tax may be imposed even if a passenger does not make both an outward and a homeward passage as long as the voyage begins or ends in the United States. Free income tax service Passenger. Free income tax service   A passenger is an individual carried on the vessel other than the Master or a crew member or other individual engaged in the business of the vessel or its owners. Free income tax service Example 1. Free income tax service John Smith works as a guest lecturer. Free income tax service The cruise line hired him for the benefit of the passengers. Free income tax service Therefore, he is engaged in the business of the vessel and is not a passenger. Free income tax service Example 2. Free income tax service Marian Green is a travel agent. Free income tax service She is taking the cruise as a promotional trip to determine if she wants to offer it to her clients. Free income tax service She is a passenger. Free income tax service Taxable situations. Free income tax service   There are two taxable situations. Free income tax service The first situation involves voyages on commercial passenger vessels extending over one or more nights. Free income tax service A voyage extends over one or more nights if it extends for more than 24 hours. Free income tax service A passenger vessel is any vessel with stateroom or berth accommodations for more than 16 passengers. Free income tax service   The second situation involves voyages on a commercial vessel transporting passengers engaged in gambling on the vessel beyond the territorial waters of the United States. Free income tax service Territorial waters of the United States are those waters within the international boundary line between the United States and any contiguous foreign country or within 3 nautical miles (3. Free income tax service 45 statute miles) from low tide on the coastline. Free income tax service If passengers participate as players in any policy game or other lottery, or any other game of chance for money or other thing of value that the owner or operator of the vessel (or their employee, agent, or franchisee) conducts, sponsors, or operates, the voyage is subject to the ship passenger tax. Free income tax service The tax applies regardless of the duration of the voyage. Free income tax service A casual, friendly game of chance with other passengers that is not conducted, sponsored, or operated by the owner or operator is not gambling for determining if the voyage is subject to the ship passenger tax. Free income tax service Exemptions. Free income tax service   The tax does not apply when a vessel is on a voyage of less than 12 hours between 2 points in the United States or if a vessel is owned or operated by a state or local government. Free income tax service Prev  Up  Next   Home   More Online Publications