Tax Check-Up: 2013 Quarterly Estimated Tax Payments
If you are self-employed, you are undoubtedly making quarterly estimated tax payments. With only two estimated tax payments left for the 2013 tax year, now is an excellent time for an estimated tax check-up.
Generally, you figure your estimated tax payments for the coming year when you file your annual tax return. This is fine, as long as your tax situation does not change from year to year. However, tax law changes from one year to the next could mean that you will owe more (or less) tax for 2013 than you did for 2012.
Various new tax provisions starting in 2013 could translate into larger tax bills for higher-income taxpayers, compared to 2012, even though nothing in their circumstances has changed.
Your tax situation can also change for other reasons:
- You are earning more income than you did in 2012, thereby increasing the amount you should be paying in estimated tax.
- You are earning less income than you expected, which may merit a downward adjustment in the amount you pay.
Quarterly Due Dates for Estimated Tax Payments
Estimated taxes are generally paid in four required installments throughout the year. (Qualifying farmers and fishermen pay estimated taxes in one annual payment, due January 15, 2014.) Individuals generally must pay their 2013 estimated tax installments by the following dates:
- First installment - due April 15, 2013
- Second installment - due June 17, 2013
- Third installment - due September 16, 2013
- Fourth installment - due January 15, 2014
Calendar year corporations have the same quarterly due dates, except for the fourth and last installment, due December 16, 2013.
2013 Tax Changes
The changes that are driving potentially higher tax bills for 2013 include:
Fortunately, many beneficial provisions which would have expired at the end of 2012 were extended into 2013.
Evaluate Your Current Situation
You can use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your 2013 quarterly estimated tax payments.
It is especially important to adjust your payments if you find you are not paying enough estimated tax. If you do not pay enough during any payment period, you may be charged a penalty even if you are due a refund when you file your tax return.
You are generally at risk for a penalty for any 2013 payment period, if your estimated tax payment (plus any wage withholding and previous overpayments) is less than the smaller of: 22.5 percent of your 2013 return or 25 percent of the 2012 tax liability. (This is increased to 27.5 percent for AGIs of $150,000 or more.)
In addition to providing a worksheet for computations, Form 1040-ES has everything you need to pay estimated taxes. It includes instructions, worksheets, schedules and payment vouchers. However, the easiest way to pay estimated taxes is electronically by using the Electronic Federal Tax Payment System, or EFTPS. You can also pay estimated taxes by check or money order using the Estimated Tax Payment Voucher or by credit or debit card.