I am self-employed . Do I have to pay estimated taxes?
Answer:
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.
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.
