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H&r block taxcut free file Publication 4492-B - Additional Material Prev  Up  Next   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

The H&r Block Taxcut Free File

H&r block taxcut free file Index , Hardest Hit Fund and Emergency Homeowners' Loan Programs. H&r block taxcut free file , Form 1098. H&r block taxcut free file , How To Report, Form 1098. H&r block taxcut free file A Acquisition debt, Fully deductible interest. H&r block taxcut free file , Home Acquisition Debt, Part of home not a qualified home. H&r block taxcut free file Alimony, Divorced or separated individuals. H&r block taxcut free file Amortization Points, General Rule Appraisal fees, Amounts charged for services. H&r block taxcut free file Armed forces Housing allowance, Ministers' and military housing allowance. H&r block taxcut free file Assistance (see Tax help) Average mortgage balance, Average Mortgage Balance B Borrowers More than one, More than one borrower. H&r block taxcut free file Seller-paid points, treatment by buyer, Treatment by buyer. H&r block taxcut free file Business Average mortgage balance, total amount of interest otherwise allowable to each activity, Line 13 Mortgage proceeds used for, Mortgage proceeds used for business or investment. H&r block taxcut free file C Clergy Ministers' and military housing allowance, Ministers' and military housing allowance. H&r block taxcut free file Cooperative housing, Cooperative apartment owner. H&r block taxcut free file , Cooperative apartment owner. H&r block taxcut free file , Special Rule for Tenant-Stockholders in Cooperative Housing Corporations, Form 1098. H&r block taxcut free file Cost of home or improvements, Cost of home or improvements. H&r block taxcut free file Credits, Mortgage interest credit. H&r block taxcut free file D Date of mortgage, Date of the mortgage. H&r block taxcut free file Debt Choice to treat as not secured by home, Choice to treat the debt as not secured by your home. H&r block taxcut free file Grandfathered, Fully deductible interest. H&r block taxcut free file , Grandfathered Debt, Line-of-credit mortgage. H&r block taxcut free file Home acquisition, Fully deductible interest. H&r block taxcut free file , Home Acquisition Debt Home equity, Fully deductible interest. H&r block taxcut free file , Home Equity Debt Home equity only (Table 1), Home equity debt only. H&r block taxcut free file Not secured by home, Debt not secured by home. H&r block taxcut free file Secured, Secured Debt Deductions, Part I. H&r block taxcut free file Home Mortgage Interest, Hardest Hit Fund and Emergency Homeowners' Loan Programs. H&r block taxcut free file Home office, Office in home. H&r block taxcut free file Mortgage insurance premiums, Claiming your deductible mortgage insurance premiums. H&r block taxcut free file Points, General Rule, Claiming your deductible points. H&r block taxcut free file Deed preparation costs, Amounts charged for services. H&r block taxcut free file Divorced taxpayers, Divorced or separated individuals. H&r block taxcut free file , Acquiring an interest in a home because of a divorce. H&r block taxcut free file E Emergency Homeowners' Loan Program, Hardest Hit Fund and Emergency Homeowners' Loan Programs. H&r block taxcut free file Equity debt, Fully deductible interest. H&r block taxcut free file , Home Equity Debt, Fair market value (FMV). H&r block taxcut free file Equity debt only (Table 1), Home equity debt only. H&r block taxcut free file F Fair market value (FMV), Fair market value (FMV). H&r block taxcut free file Fees Appraisal, Amounts charged for services. H&r block taxcut free file Notaries, Amounts charged for services. H&r block taxcut free file Points (see Points) Figures (see Tables and figures) Form 1040, Schedule A, How To Report, Table 2. H&r block taxcut free file Where To Deduct Your Interest Expense Form 1040, Schedule C or C-EZ, Table 2. H&r block taxcut free file Where To Deduct Your Interest Expense Form 1040, Schedule E, Table 2. H&r block taxcut free file Where To Deduct Your Interest Expense Form 1040, Schedule F, Table 2. H&r block taxcut free file Where To Deduct Your Interest Expense Form 1098, Form 1098, Mortgage Interest Statement Mortgage insurance premiums, Form 1098. H&r block taxcut free file Form 8396, Mortgage interest credit. H&r block taxcut free file Free tax services, Free help with your tax return. H&r block taxcut free file G Grandfathered debt, Fully deductible interest. H&r block taxcut free file , Grandfathered Debt, Line-of-credit mortgage. H&r block taxcut free file Ground rents, Redeemable ground rents. H&r block taxcut free file H Hardest Hit Fund Program, Hardest Hit Fund and Emergency Homeowners' Loan Programs. H&r block taxcut free file Help (see Tax help) Home, Publication 936 - Introductory Material Acquisition debt, Fully deductible interest. H&r block taxcut free file , Home Acquisition Debt Construction, Home under construction. H&r block taxcut free file Cost of, Cost of home or improvements. H&r block taxcut free file Destroyed, Home destroyed. H&r block taxcut free file Divided use, Divided use of your home. H&r block taxcut free file , Part of home not a qualified home. H&r block taxcut free file , Part of home not a qualified home. H&r block taxcut free file Equity debt, Fully deductible interest. H&r block taxcut free file , Home Equity Debt Equity debt only (Table 1), Home equity debt only. H&r block taxcut free file Fair market value, Fair market value (FMV). H&r block taxcut free file Grandfathered debt, Fully deductible interest. H&r block taxcut free file , Grandfathered Debt, Line-of-credit mortgage. H&r block taxcut free file Improvement loan, points, Home improvement loan. H&r block taxcut free file Main, Main home. H&r block taxcut free file Office in, Office in home. H&r block taxcut free file Qualified, Qualified Home Renting out part of, Renting out part of home. H&r block taxcut free file Sale of, Sale of home. H&r block taxcut free file Second, Second home. H&r block taxcut free file Time-sharing arrangements, Time-sharing arrangements. H&r block taxcut free file Housing allowance Ministers and military, Ministers' and military housing allowance. H&r block taxcut free file I Improvements Cost of, Cost of home or improvements. H&r block taxcut free file Home acquisition debt, Mortgage treated as used to buy, build, or improve home. H&r block taxcut free file Points, Home improvement loan. H&r block taxcut free file Substantial, Substantial improvement. H&r block taxcut free file Interest, Part I. H&r block taxcut free file Home Mortgage Interest (see also Mortgage interest) Interest rate method, Interest paid divided by interest rate method. H&r block taxcut free file Refunded, Refunds of interest. H&r block taxcut free file , Refunded interest. H&r block taxcut free file Where to deduct, Table 2. H&r block taxcut free file Where To Deduct Your Interest Expense Investments Average mortgage balance and total amount of interest allowable, Line 13 Mortgage proceeds used for, Mortgage proceeds invested in tax-exempt securities. H&r block taxcut free file , Mortgage proceeds used for business or investment. H&r block taxcut free file J Joint returns, Married taxpayers. H&r block taxcut free file L Lender mortgage statements, Statements provided by your lender. H&r block taxcut free file Limits Cooperative housing, mortgage interest deduction, Limits on deduction. H&r block taxcut free file Deductibility of mortgage insurance premiums, Limit on deduction. H&r block taxcut free file Deductibility of points, Limits on deduction. H&r block taxcut free file Home acquisition debt, Home acquisition debt limit. H&r block taxcut free file Home equity debt, Home equity debt limit. H&r block taxcut free file Home mortgage interest deduction, Form 1098. H&r block taxcut free file Qualified loan limit, Table 1. H&r block taxcut free file Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. H&r block taxcut free file , Average Mortgage Balance Line-of-credit mortgage, Line-of-credit mortgage. H&r block taxcut free file Loans, Mortgage proceeds used for business or investment. H&r block taxcut free file , Mortgage treated as used to buy, build, or improve home. H&r block taxcut free file (see also Mortgages) Home improvement, points, Home improvement loan. H&r block taxcut free file Qualified loan limit, Table 1. H&r block taxcut free file Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. H&r block taxcut free file M Main home, Main home. H&r block taxcut free file Married taxpayers, Married taxpayers. H&r block taxcut free file Military housing allowance, Ministers' and military housing allowance. H&r block taxcut free file Ministers' housing allowance, Ministers' and military housing allowance. H&r block taxcut free file Missing children, photographs of, Reminders Mixed-use mortgages, Mixed-use mortgages. H&r block taxcut free file Mortgage insurance premiums Claiming deductible, Claiming your deductible mortgage insurance premiums. H&r block taxcut free file Mortgage interest, Publication 936 - Introductory Material, Part I. H&r block taxcut free file Home Mortgage Interest Cooperative housing, Figuring deductible home mortgage interest. H&r block taxcut free file Credit, Mortgage interest credit. H&r block taxcut free file Fully deductible interest, Fully deductible interest. H&r block taxcut free file Home mortgage interest, Part I. H&r block taxcut free file Home Mortgage Interest, Hardest Hit Fund and Emergency Homeowners' Loan Programs. H&r block taxcut free file How to report, How To Report Late payment charges, Late payment charge on mortgage payment. H&r block taxcut free file Limits on deduction, Part II. H&r block taxcut free file Limits on Home Mortgage Interest Deduction Ministers' and military housing allowance, Ministers' and military housing allowance. H&r block taxcut free file Prepaid interest, Prepaid interest. H&r block taxcut free file , Prepaid interest on Form 1098. H&r block taxcut free file Prepayment penalty, Mortgage prepayment penalty. H&r block taxcut free file Refunds, Refunds of interest. H&r block taxcut free file , Refunded interest. H&r block taxcut free file Sale of home, Sale of home. H&r block taxcut free file Special situations, Special Situations Statement, Form 1098, Mortgage Interest Statement Where to deduct, Table 2. H&r block taxcut free file Where To Deduct Your Interest Expense Worksheet to figure (Table 1), Table 1. H&r block taxcut free file Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. H&r block taxcut free file Mortgages Assistance payments (under sec. H&r block taxcut free file 235 of National Housing Act), Mortgage assistance payments under section 235 of the National Housing Act. H&r block taxcut free file Average balance, Average Mortgage Balance Date of, Date of the mortgage. H&r block taxcut free file Ending early, Mortgage ending early. H&r block taxcut free file Late qualifying, Mortgage that qualifies later. H&r block taxcut free file Line-of-credit, Line-of-credit mortgage. H&r block taxcut free file Mixed-use, Mixed-use mortgages. H&r block taxcut free file Preparation costs for note or deed of trust, Amounts charged for services. H&r block taxcut free file Proceeds invested in tax-exempt securities, Mortgage proceeds invested in tax-exempt securities. H&r block taxcut free file Proceeds used for business, Mortgage proceeds used for business or investment. H&r block taxcut free file Proceeds used for investment, Mortgage proceeds used for business or investment. H&r block taxcut free file Qualified loan limit, Table 1. H&r block taxcut free file Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. H&r block taxcut free file , Average Mortgage Balance Refinanced, Refinancing. H&r block taxcut free file , Refinanced home acquisition debt. H&r block taxcut free file , Refinanced grandfathered debt. H&r block taxcut free file Reverse, Reverse mortgages. H&r block taxcut free file Statements provided by lender, Statements provided by your lender. H&r block taxcut free file To buy, build, or improve, Mortgage treated as used to buy, build, or improve home. H&r block taxcut free file Wraparound, Wraparound mortgage. H&r block taxcut free file N Nonredeemable ground rents, Nonredeemable ground rents. H&r block taxcut free file Notary fees, Amounts charged for services. H&r block taxcut free file O Office in home, Office in home. H&r block taxcut free file P Penalties Mortgage prepayment, Mortgage prepayment penalty. H&r block taxcut free file Points, Points, Deduction Allowed in Year Paid, Form 1098. H&r block taxcut free file Claiming deductible, Claiming your deductible points. H&r block taxcut free file Exception to general rule, Deduction Allowed in Year Paid Excess, Excess points. H&r block taxcut free file Funds provided less than, Funds provided are less than points. H&r block taxcut free file General rule, General Rule Home improvement loans, Home improvement loan. H&r block taxcut free file Seller paid, Points paid by the seller. H&r block taxcut free file Prepaid interest, Prepaid interest. H&r block taxcut free file , Prepaid interest on Form 1098. H&r block taxcut free file Prepayment penalties, Mortgage prepayment penalty. H&r block taxcut free file Publications (see Tax help) Q Qualified homes, Qualified Home Qualified loan limit Average mortgage balance, Average Mortgage Balance Worksheet to figure (Table 1), Table 1. H&r block taxcut free file Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. H&r block taxcut free file R Redeemable ground rents, Redeemable ground rents. H&r block taxcut free file Refinancing, Refinancing. H&r block taxcut free file Grandfathered debt, Refinanced grandfathered debt. H&r block taxcut free file Home acquisition debt, Refinanced home acquisition debt. H&r block taxcut free file Refunds, Refunds of interest. H&r block taxcut free file , Refunded interest. H&r block taxcut free file Rent Nonredeemable ground rents, Nonredeemable ground rents. H&r block taxcut free file Redeemable ground rents, Redeemable ground rents. H&r block taxcut free file Rental payments, Rental payments. H&r block taxcut free file Renting of home Part of, Renting out part of home. H&r block taxcut free file Time-sharing arrangements, Rental of time-share. H&r block taxcut free file Repairs, Substantial improvement. H&r block taxcut free file Reverse Mortgages, Reverse mortgages. H&r block taxcut free file S Sale of home, Sale of home. H&r block taxcut free file Second home, Second home. H&r block taxcut free file , Deduction Allowed in Year Paid Secured debt, Secured Debt Seller-paid points, Points paid by the seller. H&r block taxcut free file Separate returns, Separate returns. H&r block taxcut free file Separated taxpayers, Divorced or separated individuals. H&r block taxcut free file Spouses, Married taxpayers. H&r block taxcut free file Statements provided by lender, Statements provided by your lender. H&r block taxcut free file Stock Cooperative housing, Stock used to secure debt. H&r block taxcut free file T Tables and figures Deductible home mortgage interest Fully deductible, determination of (Figure A), Fully deductible interest. H&r block taxcut free file How to figure (Table 1), Table 1. H&r block taxcut free file Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. H&r block taxcut free file Mortgage to buy, build, or improve home (Figure C), Mortgage treated as used to buy, build, or improve home. H&r block taxcut free file Points (Figure B), Points Qualified loan limit worksheet (Table 1), Table 1. H&r block taxcut free file Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. H&r block taxcut free file Tax credits, Mortgage interest credit. H&r block taxcut free file Tax help, How To Get Tax Help Tax-exempt securities Mortgage proceeds invested in, Mortgage proceeds invested in tax-exempt securities. H&r block taxcut free file Time-sharing arrangements, Time-sharing arrangements. H&r block taxcut free file V Valuation Fair market value, Fair market value (FMV). H&r block taxcut free file W Worksheets Deductible home mortgage interest, Table 1. H&r block taxcut free file Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. H&r block taxcut free file Qualified loan limit, Table 1. H&r block taxcut free file Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. H&r block taxcut free file Wraparound mortgages, Wraparound mortgage. H&r block taxcut free file Prev  Up     Home   More Online Publications