If you have a sole proprietorship, partnership, LLC, S-Corp business and do not have a payroll setup that withholds taxes on your (personal) behalf for any profits paid out to you from your business, you (personally) may be required to make estimated payments on that income on a personal level to avoid paying interest and penalty when you file your tax return.
In most cases, you must pay estimated tax for 2013 if both of the following apply.
1. You expect to owe at least $1,000 in tax for 2013,
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 2013 tax return,
b. 100% of the tax shown on your 2012 tax return.
Your 2012 tax return must cover all 12 months.
Note. These percentages may be different if you are a
farmer, fisherman, or higher income taxpayer. See
Special Rules, later.
Here are the 5 steps you will need to make estimated payments for 100% of last years (2012) tax
Steps to make 100% payment of last years tax (safe harbor from penalties)
1. Look at your 2012 tax return and see how much you owed (TOTAL TAX line).
2. If you have 2013 W-2s or your most recent 12/31 paystub look at your total (YTD) Federal withholding and subtract them from last years TOTAL TAX. Save this number for #3
3. With this result of your little calculation -Fill out the Q4 Voucher - here is a LINK to 1040-ES Payment coupon
4. Write a check for the payment amount and send it to the right mailing addresses based on your state - here is a LINK to IRS estimated payment addresses
5. Do not forget your state estimated payments for last year's accrued tax liability are probably due today as well so Google your state name and estimated payment vouchers for individuals and do the same 100% of last years tax trick for them as well.
Relax, now all you have to do is download our tax data organization pack and book an appointment for us to do your taxes for you.