The estimated tax payment for the third quarter is due on Thursday, September 15, 2022. This typically applies to taxpayers who are not subject to withholding, such as those who are self-employed, investors or retirees. According to the Internal Revenue Service, taxpayers with other income not subject to withholding, including interest, dividends, capital gains, alimony, cryptocurrency and rental income, normally also make estimated tax payments.
The best way to avoid penalties and interest is to pay your estimated taxes on time. You can use the estimated tax worksheet in the Form 1040 instructions to help you calculate your estimated tax liability. If you need help, please reach out to a tax professional.
In most cases, taxpayers should make estimated tax payments if they expect:
- To owe at least $1,000 in taxes for 2022 after subtracting their withholding and tax credits.
- Their withholding and tax credits to be less than the smaller of:
- 90% of the tax to be shown on their 2022 tax return or
- 100% of the tax shown on their 2021 tax return. Their 2021 tax return must cover all 12 months.
Special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year. Publication 505, Tax Withholding and Estimated Tax, provides more information on estimated tax rules.
The worksheet in Form 1040-ES, Estimated Tax for Individuals, or Form 1120-W, Estimated Tax for Corporations, has details on who must pay estimated tax.
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