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Issue Number: IR-2023-111
Inside This Issue
Mid-June estimated tax payment deadline in sight for many taxpayers
WASHINGTON — The Internal Revenue Service today reminded taxpayers of the 2023 second quarter estimated tax deadline. Those who pay estimated taxes should consider the June 15 deadline to stay current with their taxes.
Estimated tax is the method used to pay tax on income that isn’t subject to withholding. Payments are normally made by self-employed individuals, retirees, investors, businesses, corporations and others that do not have taxes withheld.
Taxes are pay-as-you-go
Taxpayers may also have to pay estimated tax if the amount of income tax being withheld from their salary, pension or other income isn’t enough. If necessary, those who receive a salary or wages can avoid having to pay estimated taxes by asking their employer to withhold more tax from their earnings. To do this, taxpayers should submit a new Form W-4, Employee’s Withholding Certificate, to their employer.
Who must pay estimated tax?
Individual taxpayers can use the IRS Interactive Tax Assistant online to see if they are required to pay estimated taxes. They can also see the worksheet in Form 1040-ES, Estimated Tax for Individuals, for more details on who must pay estimated tax.
Corporations generally must make estimated tax payments if they expect to owe tax of $500 or more when they file their return. Corporations can see Form 1120-W, Estimated Tax for Corporations, for more information.
Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, that can be especially helpful to those who have dividend or capital gain income, owe alternative minimum tax or self-employment tax, or have other situations.
More people will receive 1099-Ks
The IRS encourages taxpayers earning income that’s not normally subject to withholding to consider making estimated tax payments throughout the year to stay current and avoid a surprise at tax time.
How to pay estimated taxes
Taxpayers can also use the Electronic Federal Tax Payment System (EFTPS) to make an estimated tax payment. Payment by check or money order made payable to the “United States Treasury” is also an option. Form 1040-ES, Estimated Tax for Individuals, includes instructions to help taxpayers figure their estimated taxes.
Corporations must use electronic funds transfer to make all federal tax deposits (such as deposits of employment, excise and corporate income tax). This includes installment payments of estimated tax. Generally, an electronic funds transfer is made to use the EFTPS.
How to avoid an underpayment penalty
Special rules apply to some groups of taxpayers such as farmers, fishermen, certain higher income taxpayers, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year.
Tax Withholding Estimator
Using the Tax Withholding Estimator can help taxpayers prevent having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year.
IRS.gov assistance 24/7
Third quarter payments are due Sept. 15 and the final estimated tax payment for tax year 2023 is due on Jan. 16, 2024.
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