If you pay quarterly estimated income taxes, remember that your third-quarter estimated tax payment (using form 1040-ES) for 2008 is due on September 15, 2008. Not sure if this applies to you? Here’s what you need to know.To learn who needs to file quarterly and pay estimated taxes (and who does not) check the IRS web site at: http://www.irs.gov/publications/p505/ch02.html
The general rule about who has to pay estimated taxes is:
You must pay estimated tax for 2008 if both of the following apply.
- You expect to owe at least $1,000 in tax for 2008, after subtracting your withholding and credits.
- You expect your withholding and credits to be less than the smaller of:
- 90% of the tax to be shown on your 2008 tax return, or
- 100% of the tax shown on your 2007 tax return. Your 2007 tax return must cover all 12 months.
If most of your income is from being an employee, and you have tax withheld from your paychecks at your primary job, you may not need to pay estimated taxes. (This could also apply if your spouse is the primary wage earner and s/he has taxes withheld from his or her check.)
You may have to pay a penalty if you are required to pay estimated taxes and do not do so. Although the penalty is usually not a large amount of money, it is easily avoided. Determine if you must file, then send in your quarterly payment.