About IRS Form 1040-ES

Form 1040-ES, Estimated Tax for Individuals, is a document created by the Internal Revenue Service to assist people who must send in their own tax payments in addition to what their employer withholds or who do not have tax withheld at all because they are self-employed. The form consists of four dated payment vouchers that must be submitted with each quarterly estimated tax payment an individual -- or married couple filing jointly -- pays, if that payment is made by check or money order. The proper payment voucher must be submitted with each payment.

Function

Form 1040-ES is submitted in conjunction with tax payments on income from which tax has not already been withheld. People who are self-employed, or investors who earn a significant amount of interest or dividend payments, are examples of people who need to use this form to make tax payments throughout the year. This is because the IRS requires individuals to pay tax on income as it is earned. Those who expect to have at least $1,000 of remaining tax liability on Dec. 31 need to make estimated tax payments to avoid paying interest and penalties.

Time Frame

Form 1040-ES is submitted to the IRS four times a year if you are paying your quarterly estimated tax liability by money order or check. Those dates are: April 15, June 15, Sept. 15 and Jan. 15. If you file your annual tax return and pay your remaining tax liability in full by Feb. 1 -- instead of waiting until April 15 -- you may ignore the Jan. 15 payment deadline. Regardless of your payment method, your quarterly payments must be submitted by these dates, but form 1040-ES is only used in conjunction with check and money order payments.

Considerations

Estimated tax payments may be submitted in several ways. Not all of them require you to submit form 1040-ES. You may pay by check or money order by filling out the voucher with your name, address and Social Security number. The payment should be made out to "United States Treasury." Electronic funds withdrawal and the Electronic Federal Tax Payment System allow you to submit your refunds or payments for free through a secure online system. You may also pay by phone using your credit card, but you will pay a convenience fee for this service.

Misconceptions

This system is not just for the self-employed; anyone who expects to owe $1,000 or more on April 15 needs to make quarterly estimated tax payments in order to avoid paying penalties and interest to the IRS. Form 1040-ES is not a tax return. Its only function is to act as a deposit slip. When you submit a quarterly estimated tax payment to the IRS, you are basically making a deposit to your tax account for that year.

Warning

The due dates listed above are hard and fast deadlines, just like the April 15 deadline for filing your tax return. If you do not submit your estimated quarterly tax payments by these dates, you may be subject to interest and penalties. The Jan. 15 payment is the final payment for the previous calendar year, not the first payment for the new calendar year. These dates may change slightly each year -- if the 15th falls on a weekend or holiday, the next closest day will be used.

References

• IRS: Form 1040-ES