Second Quarter June 15 Deadline Approaches for Those Who Pay Estimated Taxes
Taxpayers who pay estimated taxes: the due date to pay your second quarter tax liability is June 15.
Taxes are pay-as-you-go
Taxpayers need to pay most of the tax they expect to owe during the year. You can do that in two ways:
- Withholding from pay, pension or as Social Security.
- Making quarterly estimated tax payments during the year.
Estimated tax is the process used to pay tax on income that isn’t subject to withholding. This would be income from self-employment, interest, dividends, rent, gains from the sale of assets, prizes and awards. Individuals, including sole proprietors, partners and S corporation shareholders, generally have to make estimated tax payments if they expect to have a tax liability of $1,000 or more when they file their return. If this is for a personal return, individuals can use the IRS Interactive Tax Assistant online to see if they are required to pay estimated taxes. Corporations generally must make estimated tax payments if they expect to owe tax of $500 or more when they file.
How to avoid an underpayment penalty
You can avoid an underpayment penalty by owing less than $1,000 at tax time or by paying the majority of your taxes during the year. In General, that means making payments of at least 90% of the tax expected on your 2022 return, or those who pay at least 100 percent of the tax shown on their return for tax year 2021. Taxpayers must make estimated tax payments in four equal amounts to avoid a penalty. Although, if they receive income disproportionately during the year, they may be able to adjust the amounts of the payments to avoid or lower the penalty by using the annualized installment method. Taxpayers can use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if they owe a penalty.
Third quarter payments are due September 15 and the final estimated tax payment for tax year 2022 is due on Jan. 17, 2023.
How to pay estimated taxes
An electronic payment is the fastest, easiest and most secure way for Someone to make their payment. Individuals and businesses can securely log into their IRS Online Account or use IRS Direct Pay to submit a payment from a checking/savings account. Taxpayers can also pay using a debit, credit card or digital wallet. They can also use the Electronic Federal Tax Payment System (EFTPS) to make a tax payment. Corporations must use electronic funds transfer to make all federal tax deposits (such as deposits of employment, excise, and corporate income tax). This includes installment payments of estimated tax. If the corporation does not want to use EFTPS, it can arrange for its tax professional, or other trusted third party to make electronic deposits for them.