How to File a Federal Estimated Tax Form
Federal estimated taxes must be paid by those who do not have taxes withheld from their earnings or may not have enough withheld, and expect to owe over a threshold amount. The IRS requires taxes be paid throughout the year on your earnings, even if a refund is expected at the end of the year (with a few exceptions). Find out if these federal estimated tax rules apply to you, as well as how and when you need to file them.
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Instructions
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Understand what income and earnings are regulated by estimated taxes. Any income that is not subject to income tax withholding is regulated by estimated taxes. Some examples of this income are self-employment, interest, dividends, prizes and other income sources that do not have enough income taxes withheld. You must pay estimated taxes if you expect to owe at least $1,000 for the year and your withholdings and credits are either less than 90 percent of this year's tax return or 100 percent of last year's return.
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Understand when estimated taxes are not required. If you meet the following three conditions you will not be required to pay estimated taxes: you didn't owe any taxes last year, you were a U.S. citizen or a U.S. resident for the complete year, and your tax return covered 12 months last year.
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Choose the correct estimated tax form for your needs. In most cases, you will need to file Form 1040-ES to file your estimated taxes. This form is to be used for individuals, sole proprietors, partners and S corporations. If you are filing for a corporation, you will need to use Form 1120-W.
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Calculate your estimated taxes. To calculate your estimated taxes, you will want to have your expected adjusted gross income, taxable income, taxes, deductions and credits for the current year. You will also want to have your last year's return to help you estimate the taxes owed. Once you have this information available, you can use the worksheet in Form 1040-ES for the calculations. Each quarter, you will want to recalculate what is owed to ensure you have not paid too much or too little. If you find either of these cases applies, you can resubmit another Form 1040-ES for the next quarter's estimate.
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File and pay your estimated taxes on time. When paying estimated taxes, you will need to submit your payment on a quarterly basis. Care should be taken to file and pay on time, so that you don't incur a penalty. If you don't pay enough per quarterly period, you may still be charged a penalty even if you receive a refund at the end of the year.
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