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Form 1040 - Tax Forms - 1099 and W2 IRS Tax Forms | Buy Tax Forms

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Form 1040

Everyone who earns an income does not have taxes deducted from it before they receive it. Independent contractors such as freelancers happen to fall into this category. Not to mention the interest that comes from dividends and rent, unemployment compensation, and retirement benefits are also  other examples of income that people receive that they do not have taxes come out of before they receive it. If your income falls into any of these groups you are expected to pay estimated taxes.

About Paying Estimated Taxes - When it comes to the estimated tax payment that you will have to pay it is based off of your income for the year. Usually, it is underestimated which results in you having to deal with underpayment as well as a penalty. However, to avoid having to have a penalty it is suggested that you use your prior year’s taxes as a guide. Usually, if you pay 100% of the previous year’s taxes you will not have to worry about the penalty. However, if you end up paying too much you will receive a tax refund at the end of the year. Additionally, you should pay your quarterly taxes on time as well or you will receive a penalty because your taxes were paid late. This penalty will still be effective even if you have overpaid on your taxes.

Determining Estimated Taxes - When it comes to determining your estimated taxes the amount can be calculated by using an estimate of your current income. Many people find that their estimates are more accurate when they begin by using their prior year’s federal tax returns. More specifically you will want to pay attention to the taxable income section, the taxes that you paid, and the credit deductions. For assistance you can use the worksheets that are found in the 1040 form ES packet. It will help you see the differences between the two years clearer.

Who Files 1040 ES –   In order to find out whether or not you have to file 1040 ES forms you will have to do some calculations. First, you will need to take a look at the amount of taxes you paid the previous years. Second, you will add 90% of the taxes that you have estimated you will end up paying the current year. Lastly, you will want to compare the total with any withholdings and credits that you are anticipating. Overall, if you think you are going to owe $1000 or more in taxes after the deductions and credits have been factored in and your withholdings and credits could be less than the estimation you will want to file a 1040 ES form.

Exceptions - If you were not liable for taxes the previous year and you were a U.S. citizen for the whole year you will be exempt from filing the 1040 ES form.

When To File The 1040 ES Form You are expected to pay estimated tax payments four times during a year. To be exact the due dates are April 15th, June 15th, September 15th and the following year on January 15th. However, in certain situations the due dates may be the 15th day of the 4th 6th and 9th month of the year and still the 1st month of the following year.

When To Pay When it comes to making payments the schedule is pretty flexible as long as the payments are received on time. You have the option of paying in any interval that fits your finances as long as the entire balance has been paid by the due date. Some people find it easier to estimate the amount owed and pay for the whole year on April 15th.

 

 
 
 
 

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