Basics of estimated taxes for individuals

This is a friendly notice to tell you that you are now leaving the H&R Block website and will go to a website that is not controlled by or affiliated with H&R Block. You should know that we do not endorse or guarantee any products or services you may view on other sites. For your protection, take a moment to carefully review their policies and procedures, as they may not be the same as those of H&R Block. That lack of awareness on part of taxpayers over what to do with their forms is probably driving the lower tax refund average, says Andrea Coombes, a tax specialist and writer at NerdWallet. Changes in the new tax law could lead to confusion as people try to figure out how much they will receive in their refunds, or if they owe money to the IRS. Here’s what you should know about what’s different this year.

You don’t have to pay estimated tax for the current year if you meet all three of the following conditions. You may have to pay estimated tax for the current year if your tax was more than zero in the prior year. See the worksheet in Form 1040-ES, Estimated Tax for Individuals for more details on who must pay estimated tax. Taxes are no fun, and remembering to pay estimates every quarter is a pain.


A tax extension only gives you more time to get your paperwork together, not pay, so submitting the estimated tax can save you the headache of incurring an IRS penalty. People who generally may have estimated tax payment obligations are 1099 workers, W-2 workers who are not withholding enough to cover their tax bill, businesses, and some investors. For many of us, this means that an employer pays federal and state taxes on our behalf by withholding a certain amount from each paycheck. A Form 1040 return with limited credits is one that’s filed using IRS Form 1040 only (with the exception of the specific covered situations described below).

If the credit brings tax liability down to $0, 40% of the remainder (up to $1,000) can be refunded. Adoption Credit–This is a non-refundable tax credit for qualified expenses up to a certain level for each child adopted, whether via public foster care, domestic private adoption, or international adoption. Child and Dependent Care–About 20% to 35% of allowable expenses up to $3,000 for each child under 13, a disabled spouse or parent, or another dependent care cost can also be used as a tax credit. Like many other tax credits, this one is also based on income level.

Have Questions About Your Taxes?

You just need to make sure that you are estimating your annual taxes very precisely. These tax payments are intended to ensure that you have paid enough tax by April 15. However, under certain circumstances (as outlined below), people need to make estimated tax payments, which are essentially pre-payments required by the government. Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed.

  • Although most 2018 tax filers are still expected to get refunds, some taxpayers will unexpectedly owe additional tax when they file their tax returns.
  • For additional information, refer to Publication 542, Corporations.
  • This means that because they are not considered employees, they are responsible for their own federal payroll taxes (also known as self-employment tax).
  • Prior to 2018, taxpayers could claim a personal exemption, which lowered taxable income.
  • If you earn income as a freelancer or receive certain types of nonwage income, though, you may need to pay what the IRS calls “estimated quarterly taxes.” Here’s what those are and how they work.
  • Generally for this declaration they use Form 1040 to calculate the estimated tax.Resident aliens use Form 1040-ES (NR) to calculate estimated tax.
  • These refund interest payments are taxable, and taxpayers must report the interest on their 2020 tax return.

If a payment is mailed, the date of the U.S. postmark is the date of payment. If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that isn’t a Saturday, Sunday or holiday. Estimating your tax refund can help you prepare for tax season. By using a tax refund calculator, you’ll get an idea of how much you might get back or owe. This can help you plan your finances better, whether it’s setting aside money if you owe taxes or planning how to use a potential refund. Remember, it’s just an estimate, but it can give you a good starting point.

Credits & Deductions

Please refer to Publication 505, Tax Withholding and Estimated Tax, for additional information. If you’re making estimated tax payments and have federal income tax withholding, you can increase your quarterly estimated tax payments or increase your federal income tax withholding to cover the tax liability. If you have the proper amount withheld, estimated tax you may not need to make estimated tax payments and may not have to file Form 2210 with your tax return as you would if you only increased the remaining estimated tax payments. Of course, you also will need to have a solid estimate of your expected gross income for the year, as well as any deductions and credits that you plan to use.

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