The National Directory of Certified Public Accountants

Ask A CPA - Estimated Payments

I Am Self-Employed . Do I Have To Pay Estimated Taxes?

If your anticipated tax liability, minus any federal withholding is $1,000 or more, you must make quarterly estimated payments. There are exceptions to this $1,000 requirement that your local CPA can explain to you. Basically you can avoid a tax penalty if you meet any of these provisions: if your withholding payments are at least equal to either 90% of your current tax liability or 100% of your prior years liability; if your AGI is $150,000 or less (75,000 if MFS); or if your AGI is more than $150,000, the payment must be at least 110% of your prior year liability. Failure to pay required estimate tax installments in a timely manner will subject you to a penalty based on the prevailing IRS interest rate. Estimate tax payments are made on IRS Form 1040-ES.

If you need professional help with "Estimated Payments" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.