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This topic has explained how to identify taxpayers who should pay estimated taxes and how much and when they should pay.
Estimated tax is the amount the taxpayer anticipates will be owed on the following year's federal income tax return.
Taxpayers must make payments of estimated tax if they:
- Owe $1,000 or more in tax on this year's tax return after subtracting federal income tax withheld and credits from taxable income, and
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Expect the tax withheld and credits on next year's tax return to be less than the smaller of:
- 90% of the tax liability on next year's tax return, or
- 100% of the tax liability on this year's tax return (which must cover all 12 months)
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