2022 Federal Quarterly Estimated Tax Payments

Taxes on income earned in a given tax year – now 2021 – that are not subject to periodic withholding payments, such as wages, are paid using estimated income tax payments. You will not have to worry about estimated income tax payments if your only income is from a W-2 with taxes withheld, as your employer handles this.

a woman doing Federal Quarterly Estimated Tax Payments In & Near Bronx, NY

As taxpayers prepare for their 2021 returns, we are currently in the period where they make estimated tax payments for the 2021 tax year. As the taxpayer makes quarterly estimated tax payments, they are not in significant debt to the IRS. If you think you need tax help, SCL tax services in & near Bronx, NY, is ready to solve all your tax problems. 

 

Most self-employed taxpayers are subject to make estimated tax payments if they receive 1099 forms such as the 1099-NEC. You are responsible for paying income tax on your own if no tax is withheld from your income as your employer does not take care of it for you. Taxes are withheld from employees who receive a W-2 based on their W-4 withholding forms. Employers with 1099s do not have this, so they should make estimated tax payments, so they are not penalized by the IRS at the end of the year. 

 

For taxpayers who earn the following types of incomes during a given tax year, periodic estimated tax payments may be due:

  • Bank interest income 
  • Self-employment income (independent contractors, gig economy)
  • Dividend income
  • Some alimony income
  • Rental income
  • Unemployment benefits or income
  • The taxable portion of Social Security income

Who Should Make Estimated Tax Payments

Here are the general guidelines for who should make estimated income tax payments beyond the income types listed above:

  • It is estimated that the income tax amount for the tax year will be at least $1,000 after withholding and refundable tax credits have been deducted. You expect to owe at least $1,000 when you file your tax return.
  • If the smaller of these is greater than tax withholdings and refundable tax credits:
    • 90% of your expected taxes for 2022, or
    • 100% of the amount shown on your 2021 Return.
    • Alternatively, you can estimate within 10% of your anticipated 2022 tax balance, using the exact figure from your previous year’s return.

 

If your adjusted gross income (AGI) is more than $150,000 — $75,000 if you’re married and file separately — the requirement is 110%. This requirement does not apply to farmers and fishermen. As long as you earn at least 66.6% of your income from one of these professions, only a proportionate amount of tax will be due. Since this may get complicated, we recommend working with tax experts. You’ll enjoy a smooth, worry-free tax journey with Bronx tax services

 

These are, of course, just estimates. When you’re preparing and filing your 2021 tax return, you will only owe the difference in tax if you underestimated by a small enough amount. You will be owed a tax refund if you overestimate during the year, like when an employer withholds too much tax.

 

Paying your quarterly tax estimates may seem tedious, but it helps you avoid a big tax bill during tax season. Furthermore, you can manage your tax payments more easily throughout the year by paying quarterly taxes. At Bronx tax services, we have one goal: Making taxes easier. Our tax professionals will explain the situation and keep you informed of all the options you have. 

When Are Estimated Taxes Due? 

In the 2022 tax year, you can either pay all your estimated tax by April 18, 2022 or pay it in four equal amounts by the dates shown in the table below:

  • April 18, 2022 (1st estimated payment for 2022)
  • June 15, 2022 (2nd estimated payment for 2022)
  • September 15, 2022 (3rd estimated payment for 2022)
  • January 17, 2023 (4th estimated payment for 2022)

If you file and pay your 2022 tax return by January 31, 2023, you do not have to make the payment due January 17, 2023.

a man being prepared for Quarterly Estimated Tax Payments In & Near Bronx, NY

Calculating Your Estimated Tax Payments

Estimated tax payments can be calculated using Form 1040-ES. In the instructions for Form 1040-ES, there’s a worksheet that can help you figure out your taxable income, expected adjusted gross income, taxes, deductions, and credits for the year. You can also refer to your previous year’s tax return for a general guide. Ultimately, what you need is an estimate of your income for the upcoming year.

To recalculate your estimated taxes for the next payment, you can simply complete another Form 1040-ES worksheet if your estimate is too high. As well, if your estimate is too low, readjust your next estimated tax payment using the Form 1040-ES worksheet. If your own personal situation changes or there are changes to tax law that affect your tax liability, you should recalculate. If you have any questions or problems with form 1040-ES, we will give you all the tax help you need. Feel free to visit our tax office in Bronx, NY, or give us a call to start talking with one of our tax advisors. 

 

No Income until Later This Year?

Estimated tax payments are not required until you have income for which you will owe taxes. In other words, if you do not have any taxable income until July 2022, you will not have to pay an estimated tax until September 15, 2022. Then you can either pay your entire estimated tax by September 15, or you can pay it in two installments by September 15 and January 17, 2023.

 

Farmers and Fishermen

You can make just one estimated tax payment for the 2022 tax year by January 17, 2023, if at least two-thirds of your gross income is generated by farming or fishing. You don’t have to make any estimated tax payments if you file your 2022 tax return by March 1, 2023, and pay all of the tax you owe by that date.

Penalties

If you don’t pay enough tax throughout the year, you could be penalized whether you make estimated tax payments or use withholding. If you owe less than $1,000 in taxes, the penalty does not apply. In addition, you can avoid the penalty if your estimated tax payments or withholding is equal to at least 90% of your tax liability for 2022 or 100% of the amount shown on your 2021 tax return (110% if your 2021 adjusted gross income – AGI was more than $150K).

 

Need Tax Consultation In & Near Bronx, NY?

Nobody likes dealing with the IRS. Avoiding penalties can be easy if you leave this to tax professionals who know what they’re doing. SCL tax services in & near Bronx, NY, is ready to handle all your tax needs. Whether you’re an individual or a business, you can count on us. Give us a call or visit our tax office to start talking with one of our tax professionals in & near Bronx, NY. 

 

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