Estimated Tax (for non corporations)
Estimated tax is an IRS tax requirement for some individuals and businesses. It is important to file and pay estimated tax so that you will not incur more taxes or penalties from the IRS.
How to file estimated tax?
You need to use the IRS tax form 1040-ES to file estimated tax for individuals.
Who need to file and pay estimated tax?
The following people may need to file an estimated tax return and deposit an estimated tax payment:
- a sole proprietor,
- a partner,
- a shareholder of an S corporation
- a corporation (but will be discussed in further detail later)
if the total of your estimated income tax and self employment tax is greater than the limit set by the IRS.
What to do if I underpay the estimated tax?
The IRS requires the above people to withhold taxes and pay estimated taxes. If you underpay estimated taxes, you will owe the tax on the amount unpaid and also a penalty. The IRS will send you a bill of both later on.