Here’s a list of 10 important facts about how to pay estimated taxes and avoid estimated tax penalties. The first five are explained in the video
- Estimated taxes aren’t really taxes at all
- You might have to make estimated tax payments if you have any taxable income besides W-2 wages
- You’re generally required to make estimated tax payments if you owe $1000 or more when you file your 1040
- Estimated tax payments are due four times per year, but they’re not paid “quarterly”
- The easiest way to make estimated tax payments is to use the IRS Direct Pay system
- There are several specific exemptions from the requirement to pay if you owe $1000
- Sometimes it makes sense to make estimated tax payments even when they’re not required
- Dividing the amount you owed last year by 4 and using that result to make payments this year is not always the best approach
- The IRS has a detailed worksheet which shows you exactly how to calculate the amount of your payment
- When you’re self-employed, it’s possible to have no income subject to Federal income tax but still owe money when you file your 1040 because of the SE tax and be required to make estimated tax payments