How to Make Estimated Tax Payments?

Question

on what basis to estimate the provision for taxation

Answer 1

Gross personal income. This is your labor cost of you. So how much are you going to make. Then you find out how much you get to keep.

Answer 2

Estimated tax payments are based on how much you think you will make in the coming year.

Don't under estimate because if you make over 10% of what you estimated you could pay an under payment penalty.

Check out

http://www.irs.gov

for more info on where to send you payments you form 1040V

Payments are due
April 15 2006
June 15 2006
Sept 15 2006
&
Jan 15 2007
for the tax year ending 2006.

You do not have to make the final (jan 2007) payment if you think you have already paid enough tax.

Best advise is to speak to a tax professional.

Remember under paying is worse than over paying. You won't get fined or penalized for over paying.

If you are paying estimated tax your are probably self employed. Remember that you pay not only
federal income tax
Socail security tax
medicare tax

But also the part of social securuty & medicare tax that is normally paid by the employer.

Answer 3

In order to avoid a penatly, you need to have paid estimates equaling either:
100% of last year's taxes
or
90% of this year's taxes.

Of course, most people would pick the lower of the 2. If you don't satisfy one of those, you will have a penalty. So, look at your last yr's 1040 tax return and see the taxes. Divide it by 4 and pay that amount each quarter.

If you know your income will be much lower this year, then you can estimate this yrs taxes and pay that, but that's risky!

Answer 4

If your adjusted gross income for 2005 is less than $150,000 then you would base your estimates on 100% of last years tax or 90% of this years tax.
If your adjusted gross income was greater than $150,000 for 2005 then you would base your estimates on 110% of last years tax or 90% of Thisis years tax.
Estimated taxes are paid quarterly using form 1040ES and your states equivalent form.
If you meet the percentage applicable to your situation then no matter what you owe April 15th there would never be a penalty for under paying your estimated taxes.