How to Pay IRS Advance Taxes

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Advance taxes are simply taxes that are paid before they are due. For individuals who receive a regular paycheck, advance taxes are withheld from each paycheck, usually at a rate designated by the employee. If you receive income from other sources, such as a retirement plan or government pension, advance taxes may not be withheld when payment checks are processed. In these cases, you'll need to contact the paying agency to request that advance tax be withheld or make estimated tax payments to the IRS.

Things You'll Need

  • Prior year's tax return
  • 2009 IRS Form 1040-ES, Estimated Tax for Individuals
  • IRS Form W-4, Employee's Withholding Allowance Certificate
  • IRS Form W-4V, Voluntary Withholding Request
  • IRS Form W-4P, Withholding Certificate for Pension or Annuity Payments
  • Calculator
  • Computer with Internet access

Through Withholding at Source

  • Use the Withholding Calculator provided by the IRS to determine if you have enough advance tax withheld from your payment sources. This is especially important in 2009 due to the American Recovery and Reinvestment Act of 2009, which might have lowered the amount of advance tax your employer withholds from your paycheck.

  • Update your Form W-4 with your employer to change your withholding amounts. The IRS recommends that you review your W-4 annually or when your financial or personal situation changes, to ensure that you are withholding the correct amount of tax.

  • Complete Form W-4V, and submit it to the appropriate government agency to begin or change advance tax withholding from your government payments. The agency will submit the advance tax withheld to the IRS on your behalf.

  • Complete Form W-4P and submit it to the institution that processes your pension or annuity payments to begin or change tax withholding from pension and annuity payments. The institution will submit the advance tax withheld to the IRS on your behalf.

Through Estimated Taxes

  • Use the 2009 Form 1040-ES to determine your estimated advance tax payments. You should make tax payments if you think you will owe tax of at least $1,000 for 2009 and expect your total withholding to be less than the smaller of 90 percent of tax paid as a result of your 2009 return, or 100 percent of your taxes paid in 2008. If your adjusted gross income in 2008 was greater than $150,000 (or $75,000 for married filing separately status), the 2008 number increases to 110 percent.

  • Use the Estimated Tax Worksheet in Form1040-ES to calculate your estimated advance tax. The Worksheet provides instructions on which numbers you should use, including current amounts for personal exemptions and standard deductions.

  • Calculate your estimated advance tax using the Tax Rate Schedules in Form 1040-ES. Add the estimated tax to Line 6 of the Worksheet and adjust for credits to calculate your estimated advance tax figure.

  • Make advance tax payments to the IRS using the payment vouchers included in Form 1040-ES. Pay on a quarterly or an annual basis, but be sure to make all payments before Jan. 15, 2010 to avoid late payment penalties.

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