How to Make Federal Budget Estimates

Video Transcript

"Hi, I'm Miranda Chook, a CPA and now I'm going to talk about how you make quarterly estimated federal tax payments. In general, for individuals and corporations, the IRS requires that you pay taxes on income that isn't otherwise subject to withholding every quarter. Now for individuals, typically, if you work for an employer, you have signed a form where your employer is withholding taxes on your behalf every pay period so you don't really have to worry about making estimated quarterly tax payments on that but, if you you have interest or other self employment income or perhaps if you're not employed and you're receiving unemployment compensation and you haven't elected to have voluntary withholdings on that then you may need to consider making estimated tax payments. For the corporations, taxes typically are not withheld on income so you do need to make the calculation every quarter on your income and have taxes remitted to the IRS if you expect a profit for the full year. In general, for individuals, if you expect to owe at least a thousand dollars in taxes at the end of the year after your withholdings and credits, and those withholdings and credits are at least ninety percent of what your two thousand nine taxes are going to be or a hundred percent of what your two thousand eight withholdings and credits were, then you do need to consider making these estimated tax payments. So again, these were just general guidelines so please check with an experienced financial adviser to see how this effects your specific circumstances."