Reminder: Estimated Tax Payments Due June 15

By Marcia Richards Suelzer, Toolkit Staff Writer

In general, you should make an estimated tax payment if you:

• think that you'll owe at least $1,000 in tax for 2011, after subtracting your withholding and refundable credits, and
• expect your withholding and refundable credits to be less than the smaller of:
  • 90% of the tax reported on your 2010 tax return, or
  • 100% of the tax reported on your 2009 return.

To compute the amount to pay, you need to estimate the amount of your expected adjusted gross income, taxable income, taxes, deductions, and credits for 2011. Fortunately, the IRS is kind enough to provide a worksheet for just that purpose.

Tip. The computation is different for independent contractors than for self-employed individuals, because self-employed individuals are entitled to a deduction for one-half of the self-employment tax paid. Again, the IRS provides a worksheet to compute the amount of the deduction.

Form 1040ES, Estimated Tax for Individuals, provides all you'll need to pay estimated taxes. This includes instructions, worksheets, schedules and payment vouchers. The easiest way to pay estimated taxes, however, is electronically through 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.

Posted June 9, 2011