The following discussion provides a brief overview of the requirements for filing estimated taxes at the federal level. Most states have similar rules but income thresholds will be different and vary from state to state.
If you have income from the following sources you may be required to remit estimated taxes:
Basically independent contractors, sole proprietors, partners and taxpayers with significant passive income or other income usually must set up quarterly estimated taxes.
As a general rule, you must pay estimated taxes if both of these tests are applicable to your situation:
1) You expect to owe at least $1,000 in tax after subtracting your tax withholding (if you have any) and credits, and
2) You expect your withholding and credits to be less than the smaller of 90% of your current year taxes or 100% (110% for certain high income taxpayers) of the tax on your prior year return.
Using the prior year tax safe harbor is generally the recommended course of action since it prevents penalties for the current year no matter how much the ultimate liability will be once the return is filed.
Note: For farmers, fishermen, certain household employers and certain higher income taxpayers special rules apply.
For Sole Proprietors, Partners and S Corporation shareholders, you generally have to make estimated tax payments if you expect to owe $1,000 or more in tax when you file your return.
To figure your estimated tax, include your expected gross income, taxable income, taxes, deductions and credits for the year. There is a useful worksheet in Form 1040ES, Estimated Tax for Individuals for making these computations.
You want to be as accurate as possible to avoid penalties. Often times, it is useful to overestimate income and underestimate expenses to make sure that the installments end up being sufficient to avoid penalties.
Also, taxpayers need to consider changes in their tax situation during the year and recent and to be enacted tax law changes.
The year is divided into four payment periods, or due dates, for estimated tax purposes. Those dates generally are April 15, June 15, Sept. 15 and Jan. 15, except in the rare case when an individual taxpayer has a fiscal tax year.
Form 1040ES, Estimated Tax for Individuals, provides instructions, worksheets, schedules and payment vouchers. You can pay estimated taxes by check or money order using the Estimated Tax Payment voucher.
The easiest way to pay estimated taxes, however, is electronically through the Electronic Federal Tax Payment System or EFTPS.
You can also pay estimated taxes by credit or debit card.
There is no shortcuts here. You must crunch the numbers to determine where you stand and to insure against penalties for underpayments of estimated taxes.
“Steven is a trusted adviser. We depend on him for so many things. He is patient, listens to our needs and makes excellent suggestions. He is extremely talented. We value his advice and have recommended him unhesitatingly to friends and family.” December 8, 2009
Hiring Steven was quite possibly the best decision of my life! Steven took the time to hear every single one of my concerns and address them in an extremely clear, concise and thorough manner. He guided me through the notoriously complicated and stressful process of probate with the utmost of compassion and dedication. Thank you Steven!
I highly recommend Steven J. Fromm for all your estate and tax planning needs. He has the most complete and thorough knowledge of current as well as pending federal, state, and local tax codes of any professional that I have ever been involved with. His ability to totally sort out your current financial condition and relate it to a plan to minimize your tax liability and allow you to sleep at night is without equal. He is professional, timely, creative, and an advocate for your needs, whether its personal or business. You can be assured that you will be well taken care of, with cutting edge/ sound financial and tax advice by Steven J. Fromm.
I have always found Steve to be very responsive, accurate and creative in legal matters presented to him. He demonstrates a good business sense. We have collaborated on several highly technical issues over the years. I look forward to our continuing relationship.
Steven has been instrumental in helping my partner and I to create a secure and satisfying estate plan, which meets or exceeds all of our wishes and contains contingencies for everything from medical issues to wealth management and living wills. In this process, Steven has also become a friend. If you need Estate Planning, Tax Advice, a Will or a trust, etc., we highly recommend Steven Fromm, Esquire. He will listen and be sensitive to your unique situation.
Steve is an excellent attorney who has provided help for my family personally for business, tax, and other services for many years. He is extremely knowledgeable and thorough, and is extremely good at explaining legal concepts to me in clear terms understandable to a non-attorney. It is difficult to pick only three attributes above, since Steve’s work meets most if not all of the attributes above.
Steve is an excellent corporate attorney who has a deep understanding of corporate law, taxes and estate planning. He’s been extremely helpful to me in keeping my many companies and business ventures organized, focused and squeaky clean. He’s very strong in estate planning and wealth preservation as well. Finally, his follow through is air tight and utterly dependable.
Steven is a trusted adviser. We depend on him for so many things. He is patient, listens to our needs and makes excellent suggestions. He is extremely talented. We value his advice and have recommended him unhesitatingly to friends and family.
Steve Fromm is a superb lawyer and I highly recommend him! After a terrible experience with a previous lawyer concerning an estate administration, I entered his office feeling very deflated, confused and discouraged. However, I left his office feeling enthusiastic and eager to get down to business. My situation was very unique, I needed his expertise for an array of things and Steve was able to address all of my needs. With a limited timeframe and an extreme amount of obstacles to overcome he worked meticulously, diligently and accomplished extraordinary results. His professionalism is incomparable and I am forever grateful.
1420 Walnut Street Suite 300
Philadelphia, PA 19102
In order to help you more quickly, please
fill out the form and click “submit”.
A representative of the firm will call you shortly.
From their offices in Philadelphia, PA, the law firm of Steven J. Fromm & Associates, P.C. provides a full range of estate planning, probate and estate administration, tax, business and corporate legal services to clients throughout eastern Pennsylvania and the Delaware Valley, the Lehigh Valley Area, the Five-County Area, Bucks County, Delaware County, Montgomery County, Chester County, Philadelphia County, Berks County, Lehigh County, Lancaster County, York County, Harrisburg, Norristown, Doylestown, Media, West Chester, Allentown, Lancaster, and Reading.