Quarterly Taxes Flashcards
What is the schedule for making estimated quarterly tax payments for Federal income taxes?
Payment Period Due Date
January 1 - March 31 April 18, 2016
April 1 - May 31, June 15, 2016
June 1 - August 31 Sep 15, 2016
September 1 - Dec 31 Jan 17, 2017
What is “pay as you go” with reference to income tax law?
It refers to the fact that the IRS and State require payment of taxes as income is earned for all sources, not just when the return is filed at year end. Employees generally pay continuously through withholding. The self employed and those with substantial investment income are expected to pay estimated taxes each quarter.
What groups typically must pay estimated taxes?
Self/employed persons or Sole Proprietors
Partners, C and S Corp Shareholders
Investors
People who owed tax the prior year upon filing their return
Note that having a tax liability of $1,000 or more upon filing your year end return is a red flag to the IRS that you need to pay estimated tax.
How are estimated taxes generally calculated?
Start with previous year’s taxable income from the tax return, modify according to expectations for the current year, then calculated tax amount based on avoiding a tax liability due when you file for the current year.
