The deadline for taxpayers to submit their third quarter estimated tax payment is one week from today. However, individuals and businesses affected by disasters in 17 states, Puerto Rico, and the Virgin Islands may automatically qualify for a delayed tax-payment deadline, the IRS said last week.
Gig workers, sole proprietors, retirees, partners, and S corporation shareholders generally should make estimated tax payments if they expect to have a tax liability of $1,000 or more when they file their return.
As a general rule, taxpayers should make estimated tax payments if they expect:
- To owe at least $1,000 in taxes for 2024 after subtracting their withholding and tax credits.
- Their withholding and tax credits to be less than the smaller of:
- 90% of the tax to be shown on their 2024 tax return, or
- 100% of the tax shown on their complete 12-month 2023 tax return.
To figure estimated tax, taxpayers calculate their expected adjusted gross income (AGI), taxable income, taxes, deductions, and credits for the year, the IRS said. To figure 2024’s estimated tax, the IRS recommends using income, deductions, and credits from 2023 as a starting point.
Taxpayers can use the following tools on IRS.gov to check if they’re required to pay estimated taxes:
- Tax Withholding Estimator
- IRS Interactive Tax Assistant
- Worksheet in Form 1040-ES, Estimated Tax for Individuals
The agency encourages taxpayers earning income not normally subject to withholding to consider making estimated tax payments throughout the year to stay current and avoid an unwanted surprise at tax time.
An electronic payment is the easiest, fastest, and most secure way to make an estimated tax payment, according to the IRS. The Payments page on IRS.gov provides complete tax payment information, how and when to pay, payment options, and more.
Taxpayers can securely log into their IRS Online Account or use IRS Direct Pay to submit a payment from their checking or savings account. Taxpayers can also pay using a debit card, credit card or digital wallet.
Direct Pay and the pay by debit card, credit card, or digital wallet options are available online at IRS.gov/payments and through the IRS2Go app. Taxpayers should note that the payment processor, not the IRS, charges a fee for debit and credit card payments,
Taxpayers can also use the Electronic Federal Tax Payment System (EFTPS) to make an estimated tax payment. Payment by check or money order made payable to the “United States Treasury” is also an option.
Taxpayers who underpay their taxes may have to pay a penalty regardless of whether they paid through withholding or through estimated tax payments, the IRS said. Late and skipped estimated tax payments can incur penalties even if a refund is due when a tax return is filed.
Taxpayers should use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if they owe a penalty. They can also request a waiver of the penalty if they underpaid because of unusual circumstances and not willful neglect.
Special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees, and those who receive income unevenly during the year.
Disaster-area taxpayers get an extension
Taxpayers who live, work, or have a business in a disaster-area locality automatically qualify for a delayed tax-payment deadline. Deadlines vary depending upon the disaster and locality. Currently:
- Taxpayers in parts of Arkansas, Iowa, Mississippi, New Mexico, Oklahoma, Texas, and West Virginia have until Nov. 1, 2024, to make their estimated tax payment.
- Taxpayers in all or parts of Florida, Georgia, Kentucky, Minnesota, Missouri, North Carolina, Puerto Rico, South Carolina, South Dakota, Texas, Vermont, and the Virgin Islands have until Feb. 3, 2025, to make their estimated tax payment.
For details on all recent disaster relief, visit the Around the nation page on IRS.gov.
The fourth and final estimated tax payment for tax year 2024 is due on Jan. 15, 2025.
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Tags: Income Tax, IRS, Small Business, Taxes
