Federal income tax is a pay-as-you-go tax. This means the tax must
be paid as income is earned or received. Tax is generally withheld from
your wages or salary before you get it, and may also be withheld from other
types of income such as pensions and unemployment compensation if requested.
However, tax is generally not withheld from income such as alimony, interest,
dividends, rental income, self-employment income, and capital gains. You
may be required to pay estimated tax on these types of income. Estimated
tax is the method of paying tax on income not subject to withholding and
on other income from which not enough tax is withheld. You do not have
to make estimated tax payments if your 1999 tax return will show a refund,
or a balance due of less than $1,000.
Generally, you should make estimated tax payments for 1999 if you
will owe tax of $1,000 or more, after withholding and credits, and the
total amount of tax withheld and your credits will be less than the smaller
- 90% of the tax to be shown on your 1999 tax return, or
- 100% of the tax shown on your 1998 tax return, if your 1998 tax
return covered all 12 months of the year. However, if your 1998 adjusted
gross income exceeded $150,000, or $75,000 if you filed a separate return
from your spouse, then you must pay 105% instead of 100% of last year's
Get Form 1040ES to help you figure your estimated tax liability for
Your first estimated tax payment for 1999 is due April 15th. You
may pay the entire year's estimated tax at that time, or you may pay your
estimated tax in four payments.
The four payments are due April 15th, June 15th, September 15, 1999,
and January 18, 2000. You may have to pay a penalty if you do not pay enough
tax through withholding or estimated tax payments, or if you fail to make
required estimated tax payments by the due dates. Estimated tax payments
can be used to pay federal income tax, self-employment tax, and household
employment tax. Topic 306 provides additional
information on the estimated tax penalty.
Estimated tax requirements are different for farmers and fishermen.
Publication 505 provides more
information about these special estimated tax rules and about estimated
tax in general.
Publications can be downloaded
from this site, or ordered by calling 1-800-829-3676.
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