Do you operate your business as a sole proprietor, a partnership or an S corporation? If so, you may have to make estimated tax payments.
Estimated tax payments are typically required when the amount of income tax you have withheld from wages or pensions is not enough to cover what you’ll owe on your return.
For 2009, you may need to file estimates if:
- Your 2009 tax liability will be $1,000 or more.
- Your withholding and credits will be less than 90% of the tax that will be due with your 2009 income tax return or less than 100% of the tax on your 2008 return.
You can calculate your 2009 estimated tax by basing the amount you will owe on the tax shown on your 2008 tax return. Alternatively, you can figure out your income for each quarter of 2009 as the year progresses.
Estimated taxes, which include income and self-employment tax, are due throughout the year. Say you file your return based on a calendar year. During 2009 you’ll send a check to the IRS in April, June and September, with the final payment due in January 2010.
Keep in mind you can make payments more frequently, but you may incur a penalty for amounts paid late. In addition, if your adjusted gross income exceeds $150,000 or if you are a farmer or fisherman, different rules apply.