Individual
Taxes
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Form
1040 (Adobe PDF file)
Form
1040 ES (Adobe
PDF file)
Estimated Taxes
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 the method used to pay both 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.
Who Must Pay Estimated Tax
If you had a tax liability for 2007, you may have to pay estimated
tax for 2008.
General Rule
You must pay estimated tax for 2008 if both of the following
apply.
1. You expect to owe at least $1000 in tax for 2008 after subtracting
your withholding and credits.
2. You expect your withholding and credits to be less than the
smaller of;
a. 90% of the tax to be shown of your 2008 tax return, or
b. 100% of the taxes shown on your 2007 tax return. Your 2007
tax return must cover all 12 months.
Sole proprietors, partners, and S corporation shareholders generally
have to make estimated tax payments if you expect to owe tax
of $1,000 or more when you file your return.
Corporations generally have to make estimated tax payments for
your corporation if you expect to owe tax of $500 ore more when
you file its return.
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