fbpx
News & Resources

The Hultquist Blog

What and why are these Estimated Payments included in my individual tax return?

  1. Estimated tax payments are a way for you, the taxpayer, to pay tax on your income throughout the year in addition to any withholding. For example, if you are self-employed, receive K-1’s, receive investment income, or rental income this may apply to you.
  2. They are paid quarterly on 4/15, 6/15, 9/15, and either 12/31 or 1/15 depending on your individual situation.
  3. Estimated payments are not required, but not paying them does come with consequences. If you don’t pay them you will be at risk for penalties and interest. While the rates on these penalties and interest are not high, if you have a large tax amount they can add up quickly.
  4. Estimated payments give you an opportunity to spread your tax payments throughout the year instead of paying one lump sum when you file your return.
  5. One important caveat, estimated payments will not always protect you from penalties and interest. They are estimates so if any huge swing occurs in your income there may still be penalties and interest, but they will be less than if estimated payments had not been made.
Get In Contact