FEDERAL – Estimated Tax for Individuals
General Rule In most cases, you must pay estimated tax for 2018 if both of the following apply.
1. You expect to owe at least $1,000 in tax for 2018, after subtracting your withholding and refundable credits.
2. You expect your withholding and refundable credits to be less than the smaller of: a. 90% of the tax to be shown on your 2018 tax return, or b. 100% of the tax shown on your 2017 tax return. Your 2017 tax return must cover all 12 months.
3. Higher income taxpayers. If your adjusted gross income (AGI) for 2017 was more than $150,000 ($75,000 if your filing status for 2018 is married filing separately), substitute 110% for 100% in (2b) under General Rule, earlier. This rule doesn’t apply to farmers or fishermen.
4. Household employers. When estimating the tax on your 2018 tax return, include your household employment taxes if either of the following applies:
You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income.
You would be required to make estimated tax payments to avoid a penalty even if you didn’t include household employment taxes when figuring your estimated tax.
Payment Due Dates
You can pay all of your estimated tax by April 17, 2018, or in four equal amounts by the dates shown below.
1st payment …………….. April 17, 2018
2nd payment ……………. June 15, 2018
3rd payment …………….. Sept. 17, 2018
4th payment …………….. Jan. 15, 2019*
* You don’t have to make the payment due January 15, 2019, if you file your 2018 tax return by January 31, 2019, and pay the entire balance due with your return.
When a Penalty Is Applied
In some cases, you may owe a penalty when you file your return. The penalty is imposed on each underpayment for the number of days it remains unpaid. A penalty may be applied if you didn’t pay enough estimated tax for the year or you didn’t make the payments on time or in the required amount. A penalty may apply even if you have an overpayment on your tax return.
Currently IRS interest is about 5% APR, accrued on a daily basis. This may change quarterly and varies by year/quarter
How To Pay Estimated Tax
Pay Online – IRS offers an electronic payment option that is right for you. Paying online is convenient and secure and helps make sure we get your payments on time. To pay your taxes online or for more information, go to IRS.gov/ Payments. You can pay using any of the following methods:
IRS Direct Pay – for online transfers directly from your checking or savings account at no cost to you, go to IRS.gov/Payments.
Pay by Card – To pay by debit or credit card, go to IRS.gov/Payments. A convenience fee is charged by these service providers.
Electronic Fund Withdrawal (EFW) – is an integrated e-file/e-pay option offered when filing your federal taxes electronically using tax preparation software, through a tax professional, or the IRS at IRS.gov/Payments.
Online Payment Agreement – If you can’t pay in full by the due date of your tax return, you can apply for an online monthly installment agreement at IRS.gov/Payments. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved. A user fee is charged. IRS2Go is the mobile application of the IRS; you can access Direct Pay or Pay By Card by downloading the application.
Pay by Phone – Paying by phone is another safe and secure method of paying electronically. Use one of the following methods
(1) call one of the debit or credit card service providers or
(2) the Electronic Federal Tax Payment System (EFTPS).
Debit or credit card – Call one of the IRS service providers. Each charges a fee that varies by provider, card type, and payment amount.
Official Payments 1-888-UPAY-TAXTM (1-888-872-9829) www.officialpayments.com
Link2Gov Corporation 1-888-PAY-1040TM (1-888-729-1040) www.PAY1040.com
WorldPay US, Inc. 1-844-729-8298 (1-844-PAY-TAX-8TM) www.payUSAtax.com
EFTPS – To use EFTPS, you must be enrolled either online or have an enrollment form mailed to you. To make a payment using EFTPS, call 1-800-555-4477 (English) or 1-800-244-4829 (Español). People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-733-4829. For more information about EFTPS, go to IRS.gov/Payments or www.EFTPS.gov.
Where to file and send your Estimated Tax Payment if paying by Check or Money Order
If you live in one of the following: Oregon, Washington, Idaho, California, Nevada;
Internal Revenue Service
P.O. Box 510000
San Francisco, CA 94151
No checks of $100 million or more accepted.
Please make note of date due, date paid, check or money order number, amount paid and to whom, State or Federal. Also note on comment line of payment form which tax year it is to be applied to.
Change in Tax Rates
For 2018, most tax rates have been reduced. The 2018 income tax rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%.
