Here’s what taxpayers should know about making 2019 estimated tax payments

Here’s what taxpayers should know about making 2019 estimated tax payments

by Julie Jason on Aug 15, 2019

If you own a business, receive a 1099-MISC form, or are a higher-income earner, you'll want to read IRS Tax Tip 2019-109. It identifies scenarios when you may need to make estimated tax payments. 

Here's what you need to know, quoting from the Tax Tip:

Small business owners, self-employed people, and some wage earners should look into whether they should make estimated tax payments this year. Doing so can help them avoid an unexpected tax bill and possibly a penalty when they file next year.

Everyone must pay tax as they earn income. Taxpayers who earn a paycheck usually have their employer withhold tax from their checks. This helps cover taxes the employee owes. On the other hand, some taxpayers earn income not subject to withholding. For small business owners and self-employed people, that usually means making quarterly estimated tax payments.

Here’s some information about estimated tax payments:

•             Taxpayers generally must make estimated tax payments if they expect to owe $1,000 or more when they file their 2019 tax return.

•             Whether or not they expect to owe next year, taxpayers may have to pay estimated tax for 2019 if their tax was more than zero in 2018.

•             Wage earners who also have business income can often avoid having to pay estimated tax. They can do so by asking their employer to withhold more tax from their paychecks. The IRS urges anyone in this situation to do a Paycheck Checkup using the Tax Withholding Estimator on IRS.gov. If the estimator suggests a change, the taxpayer can submit a new Form W-4 to their employer.

•             Aside from business owners and self-employed individuals, people who need to make estimated payments also includes sole proprietors, partners and S corporation shareholders. It also often includes people involved in the sharing economy.

More information:

Form 1040 Instructions

Form 1120 Instructions

Share this tip on social media -- #IRSTaxTip: Here’s what taxpayers should know about making 2019 estimated tax payments. https://go.usa.gov/xySzp