IR-2022-101: National Small Business Week: Making estimated tax payments electronically is fast and easy
Internal Revenue Service (IRS) sent this bulletin at 05/04/2022 12:05 PM EDT
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Issue Number: IR-2022-101Inside This IssueNational Small Business Week: Making estimated tax payments electronically is fast and easy IRS YouTube Videos WASHINGTON — The Internal Revenue Service reminds all businesses, including self-employed and gig workers, to make estimated tax payments quarterly, and that making them electronically is fast, easy and safe. During National Small Business Week, May 1 to 7, the IRS is highlighting tax benefits and resources tied to the theme for this year’s celebration: “Building a Better America through Entrepreneurship.” Paying estimated tax payments quarterly throughout the year is important for business owners. Individuals and businesses alike are required to pay taxes as income is earned or received throughout the year, either through withholding or estimated tax payments. That’s why those who are self-employed or in the gig economy usually need to make estimated tax payments. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax. If a taxpayer doesn’t pay enough tax through withholding and estimated tax payments, they may be charged a penalty. They also may be charged a penalty if estimated tax payments are late, even if the taxpayer is due a refund when they file their tax return. However, generally, paying quarterly estimated taxes will lessen or even eliminate any penalties. Estimated tax requirements are different for farmers, fishers and certain higher income taxpayers. In addition, special rules apply to some groups of taxpayers, such as casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules. Who must pay estimated tax Taxpayers may have to pay estimated tax for the current year if their tax was more than zero in the prior year. See the worksheet in Form 1040-ES, Estimated Tax for Individuals, or Form 1120-W, Estimated Tax for Corporations, for more details on who must pay estimated tax. Who does not have to pay estimated tax Taxpayers receiving a paycheck can check the Tax Withholding Estimator on IRS.gov to determine if the right amount of tax is being withheld from their paycheck. Also, individuals don’t have to pay estimated tax for the current year if they meet all three of the following conditions:
An individual has no tax liability for the prior year if their total tax was zero or they didn’t have to file an income tax return. Additional information on how to figure estimated tax is available in Publication 505, Tax Withholding and Estimated Tax. How to figure estimated tax To figure estimated tax, individuals must figure their expected adjusted gross income, taxable income, taxes, deductions and credits for the year. When figuring estimated tax for the current year, taxpayers will often find it helpful to use income, deductions and credits from the prior year as a starting point. When and how to pay estimated tax Using an electronic payment option available on irs.gov/payments is the easiest way for individuals, small businesses, self-employed individuals and gig workers to pay federal taxes. It’s fast, easy and secure.
The 2022 Form 1040-ES, Estimated Tax for Individuals, can help taxpayers estimate their first quarterly tax payment. While electronic filing is strongly encouraged, taxpayers may also send estimated tax payments with Form 1040-ES by mail. Corporations must deposit payments using EFTPS. Additional information is available in Publication 542, Corporations. 24/7 help at IRS.gov The IRS is also reaching out to taxpayers in other languages through online resources for small businesses and individuals. The IRS has posted translated tax resources in 20 languages on IRS.gov. For more information see We Speak Your Language. Resources:
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