The form is 1040ES. You can download it from the IRS site
or print it out of any tax program.
The overall rule is you estimate your income for the year
and then pay quarterly, so if you have (say) 100,000
income in Jan you would compute (estimate) tax due on
it then pay 1/4 of that each quarter (Due Apr 15, Jun 15,
Sep 15, Jan 15).
If the situation changes during the year, you're supposed
to recalculate and pay the rest of the paymens on the
new basis, subject to whatever you've already paid,
e.g., you have a loss in May, you recalculate for June, etc, but
take into account that you're ahead of schedule because
of the higher payment in April. If you don't follow this
schedule, you're subject to a penalty based on the number
of days between when you were supposed to pay and when you
did. This is supposed to keep you from using your very
own money all the way up to January. Can't have that; you
might do something useful with it.
There's a BIG legal loophole if you have income subject
to withholding: Payroll withholding isn't subject to
the timing penalty, and you can make extra tax payments
via withholding by filing a W4. If that's feasible,
you can delay it till December (or November if it's
too much for December's paycheck). Have to figure
carefully, though; and update that W4 again in January <g>.
Another big loophole is that you are not subject to penalty
if your paid taxes (withholding + estimated) are, roughly
speaking, enough to pay tax on last year's income at this
year's tax rates. I say roughly because there's a percentage
involved of last years (90, 100, 110% of last year's,
something like that -- I can't keep up with it). So if
you have a BIG increase in income over last year, you can
avoid the penalty.
BTW, states with income tax also generally require estimated
tax payments. Heck, I wish you make payments to me ... <gg>. |
