As accounting professionals with tax expertise we are here to help. With burdensome and complicated Internal Revenue Service (IRS) requirements regarding estimated tax payment for individual and small business.
Who has to Pay Estimated Federal Income Taxes?
As we’re sure you know, most employees (probably yours) have appropriate federal income taxes withheld from every paycheck and don’t need to worry about estimated tax payments. But almost all sole proprietors, partners, S corporation shareholders and LLC owners must pay estimated taxes.
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When are my Estimated Tax Payments Due?
Your payments are due in four installments. For the 2024 tax year they are:
- Q1 Estimated Tax Due April 15, 2024 – for income period January 1 – March 31, 2024
Yes, this is the same day your 2023 final tax return was due. Even if you filed for an automatic extension to October 15, 2023 your 2024 estimated tax payment was still due. (Hopefully, you have already made this payment.) - Q2 Estimated Tax Due June 17, 2024 – for income period April 1 – May 31, 2024
- Q3 Estimated Tax Due September 16, 2024 – for income period June 1 – August 31, 2024
- Q4 Estimated Tax Due January 15, 2025 – for income period September 1 – December 31, 2024.This gives your CPA just two weeks to determine your 2023 estimated tax payment, but recall that this is an estimated payment, so if you can’t give us everything we need to make an exact calculation we can determine an estimated payment that will allow you to avoid any penalties.
| Estimate Tax | Income Period | Deadline to Pay 1040ES |
| Q1 Estimate Tax | January 1 – March 31, 2024 | April 15, 2024 |
| Q2 Estimated Tax | April 1 – May 31, 2024 | June 17, 2024 |
| Q3 Estimated Tax | June 1 – August, 31, 2024 | September 16, 2024 |
| Q4 Estimated Tax | September 1 – December 31, 2024 | January 15, 2025 |
Then comes April 15, 2025 when all the money you owe – if any – is due. We say “if any” because our goal as your tax accountants would be to make sure you have paid the correct amounts in the four estimated tax payments we calculated for you, you should pay a very small amount or even get a small refund. We actually want you refund to be small if at all, because if you overpaid you essentially loaned money to the government interest free. Also note that even if you instruct us to apply for the automatic extension to October 15, 2023 for the final return filing, any payment that is due to the IRS is due on April 15, 2024.
But it never stops, does it? April 15, 2024 is also the due date for your first estimated tax payment for 2024!
What if I Can’t Make a Payment?
What if I absolutely can’t make my quarterly estimated tax payment to the IRS on time? The good news is you won’t go to jail! The bad news is that in most cases you pay interest and penalties. Penalties vary annually but are generally around five percent and interest also varies but is actually reasonable – far less than the typical credit card rate. Also, if you miss the exact due date for an estimated tax payment you don’t have to wait until the next due date to catch up. Paying as soon as possible can help minimize you interest cost. For example, you are unable to make your September 16, 2024 payment but a huge account receivable check arrives on September 20; go ahead and make the payment and get caught up.
What you really want to avoid is finding yourself behind on your 2024 estimated tax payments on April 15, 2024 and simultaneously behind on your first 2024 estimated tax payment. Get a live person quick at IRS by doing this.
What Form Do I Use for Estimated Tax Payment?
Your Estimated Tax Payment is 1040ES, typically paid electronically through IRS Payments from your bank or by credit care or digital wallet.
How Do I Pay My Tax Estimate?
The best way to pay is electronically through IRS Direct Pay.
- Select “Make a Payment”
- Select “Estimated Payment” from the Reason for Payment dropdown
- The remaining two fields should autopopulate with the form (1040 ES) and the tax year
- Complete the Verify Identity form. You will need
- A previous tax year’s filing status (Single, Married filing Jointly, etc.)
- Your address at the time of filing
- SSN
- DOB
- Enter your payment amount and bank information
- Check the box to receive and e-receipt
- Confirm your information and payment details
- Submit your payment
Be sure to retain your receipts and send them to your CPA. You will need them when filing your 2024 tax return.
Are There Ways to Avoid any Penalties?
Yes, there are several. Typically, making a partial payment on the due date is preferred to waiting until you have the full amount. But, be sure to speak to your CPA if you aren’t sure you’ll be able to pay by the deadline. Also, there are waivers for events such as casualties, disasters, or retirements. We can walk you through your options.
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As a final note, any applicable state and local income taxes generally require quarterly estimated tax payments, but, since these taxes are calculated based on your federal returns, as tax accounting experts we can prepare these payments as well.
Do you have other concerns about your estimated payments? Please contact us by email or phone. We are here to help.
