Who Needs to Pay Estimated Tax?

Are you self-employed?

Do you own small business?

If so, are you paying your estimated tax by the due dates?

Here is Tip for you…

Who need to pay Estimated tax?

Small businesses and self-employed individuals may need to pay estimated tax. Individuals, including sole proprietors, partners, and S corporation shareholders generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.

Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed.

Advantage of paying estimated tax

1. To avoid underpayment penalty

2. To avoid one-time tax burden.

Note:

Employed tax payers don’t need to pay estimated tax, employers withhold from the paycheck. If they are 1099 employees such as consultants, they may need to pay estimated tax.