Individuals – Calculating and Paying Quarterly Estimated Taxes
Estimated tax payments are periodic prepayments made to the IRS and state tax agencies to cover income not subject to withholding. This includes income from self-employment, interest, dividends, rental income, capital gains, and other earnings. TaxAct provides tools to help calculate, schedule, and manage these payments efficiently. Individual Estimated Tax Payments are calculated and paid using Form 1040-ES.
You must make estimated tax payments if:
You must make estimated tax payments if:
- You expect to owe at least $1,000 in tax for the year after subtracting your withholding and refundable credits, and
- Your withholding and timely estimated tax payments are less than the smaller of:
- 90% of your current year’s tax, or
- 100% of your previous year’s tax (110% if your AGI was over $150,000, or $75,000 if married filing separately).
Note: If your prior year’s tax liability was zero, you are not required to make estimated tax payments. You may choose to do so, however, to avoid a large balance due at tax time.
Estimated Taxes Due
For estimated tax purposes, the year is divided into four payment periods. Each period has a specific due date. If you do not pay enough tax by each deadline, you may be charged a penalty—even if you receive a refund when you file your tax return. Standard due dates for estimated tax payments are:
- April 15
- June 15
- September 15
- January 15 (of the following year)
You may pay the entire year’s estimated tax on April 15, or you may pay your estimated tax in four installments. If a due date falls on a Saturday, Sunday, or legal holiday, the payment is considered on time if made on the next business day.
If you miss a quarterly payment, increase the remaining payments accordingly to reduce potential penalties. Even if your total estimated tax for the year is correct, you may still be penalized if the minimum required amount wasn’t paid on time each quarter.
Special Rule for Farmers and Fishermen
If at least two-thirds of your gross income for 20XX or 20YY is from farming or fishing:
- You have only one estimated tax due date for your 20XX tax: January 15, 20YY
- If you do not make that payment, you can still avoid an underpayment penalty by filing your 20XX return and paying the full tax due by March 1, 20YY.
Set Up Estimated Tax Payments
TaxAct Online
Dashboard
- From within your TaxAct return, click Resources.
- On smaller devices, click the menu at the top left corner of your screen, then make your selection.
- Under My Return, click Federal Search.
- Near the bottom, click 20YY estimated tax payments.
- Complete the rest of the interview process.
Classic
- From within your TaxAct return, click Federal.
- On smaller devices, click the menu at the top left corner of your screen, then make your selection.
- Near the bottom, click 20YY estimated tax payments.
- Complete the rest of the interview process.
Desktop
- From within your TaxAct return, click Federal.
- On the right, click 20YY estimated tax payments.
- Complete the rest of the interview process.
- If you enter information to make estimated tax payments by electronic funds withdrawal while going through the Q&A interview questions, you must still mark each box to verify the quarterly payments when going through the e-filing steps.
The Estimated Tax Worksheet and payment vouchers are not transmitted with an e-filed return. The worksheet is for your records, and the Form 1040-ES vouchers are to be sent with payments (if mailed).
Form 1040-ES computes the amount of your required estimated tax payments, regardless of whether you select the worksheet calculation or to pay 100% of 20YY tax liability. If you wish to pay additional amounts, you can modify your total 20YY estimated tax during the interview.
Apply an Overpayment Toward Next Year’s Tax
If your return currently shows a federal refund amount, you can apply part or all that refund to next year’s tax liability. To apply an overpayment, follow the steps in the Apply Refund to Next Year Federal or State FAQ.
Payment Options
You can make payments using one of the following methods:
- Electronic Funds Withdrawal (EFW): Schedule up to four payments during e-filing. There is no additional cost to schedule estimated payments.
- Electronic Federal Tax Payment System (EFTPS): See EFTPS – Online Electronic Federal Tax Payment System for details.
- Other: See the IRS Payments page for details on other options.
ES Payments Already Made
To enter or review information for federal, state, or local estimated tax payments made for your current year tax return, and any refund applied from the prior year’s return in the TaxAct program, follow these steps.
TaxAct Online
Dashboard
- From within your TaxAct return, click Deductions & Credits.
- On smaller devices, click the menu at the top left corner of your screen, then make your selection.
- Click the Estimates & Other Taxes Paid drop-down.
- Click Add beside Estimated Tax Payments.
- Complete the rest of the interview process.
Classic
- From within your TaxAct return, click Federal.
- On smaller devices, click the menu at the top left corner of your screen, then make your selection.
- Click the Federal, state and local estimated tax payments made for 20YY drop-down, then click Federal estimates.
- Complete the rest of the interview process.
Desktop
- From within your TaxAct return, click Federal.
- Click the Federal, state and local estimated tax payments made for 20YY drop-down, then click Federal estimates.
- Complete the rest of the interview process.
Cancellation Requests
Once your return is accepted, the information related to your Direct Debit payment, such as account details, payment date, or amount, cannot be modified. If changes are necessary, you must cancel the transaction and select a different payment method.
- To cancel a payment scheduled through IRS e-file, call 1-888-353-4537 no later than 11:59 p.m. EST two business days before the scheduled date.
- If a payment is returned by your financial institution (e.g., due to insufficient funds, incorrect account details, or a closed account), the IRS will send “Letter 4870” to the address on file. This letter will explain why the payment couldn’t be processed and provide alternative payment options. If your financial institution cannot process the payment, you are responsible for making alternative arrangements and for any penalties or interest incurred.
- If there is an error in the withdrawn payment amount, contact your financial institution immediately.
- For further information, you can reach the IRS at 1-800-829-1040.
- If the Treasury causes an incorrect withdrawal from your bank account, they will return any improperly transferred funds.
- If the payment is for a state, you must contact the state tax agency to attempt to change your payment.
Removing Estimates
If you no longer want to have estimates generated or set up estimated tax payments during the e-filing steps, delete the estimated tax worksheet through the form’s assistant.
- In dashboard navigation, go to Resources, scroll to the Assistants section, and select Forms Assistant.
- In classic navigation, click Tools > Forms Assistant.
- On desktop, click Forms and locate the federal form in the Forms Explorer.
Prior Year Estimates
Once the final filing version of the TaxAct software is released in January, you are only able to complete estimated tax information (or print vouchers) for next year’s return. For example, to calculate a 20XX estimated payment due January 15, 20YY (or print the voucher) use your prior year TaxAct program. You would then have the option to print the voucher to mail the payment to the IRS, or use EFTPS.