You have to give a cut of your income to the IRS when you earn it, so the US tax system has a pay-as-you-go foundation. If you are an employee, you pay the government via tax withholdings each time you receive your salary. Retirees will pay their taxes at a similar mechanism, and tax withholding is done from their Social Security. The tax payment process is different for self-employed individuals without tax withholding from their various sources of taxable earnings like rental income, dividends, alimony, etc. In addition, self-employed people must periodically pay the IRS through quarterly tax payments. This article will discuss estimated tax payments for 2023 in detail, so keep reading to understand the issue further.
The IRS determines 4 equal installments for quarterly estimated tax payments each year, and self-employed individuals must pay according to this schedule. These payments are quarterly, but the due dates might differ from 3 months apart, and the payments don’t need to cover 3 months of income. For instance, the fourth quarterly Payment for the 2022 tax year is due on January 17, 2023. However, individuals who file their tax returns by January 31, 2023, and pay their entire balance on that date, are not required to pay the quarterly Payment on January 17. The deadlines for estimated tax payments in 2023 are as below:
Due Dates for 2023 Estimated Tax Payments
Some rules are available that let people move away from the schedule above. For example, you can pay all your estimated taxes on April 18 of the current year, so you don’t have to follow the schedule for the rest of 2023. On the other hand, you can file the 2023 tax return by January 31 of next year, so you don’t have to make the fourth quarterly Payment of 2023 on its due date.
You must pay estimated tax payments only when you have taxable income. For instance, you might not have any taxable income until August, so it is not obliged to pay estimated taxes for this period. If at least two-thirds of the sources of your gross income are from fishing and farming, you need to pay only one estimated tax payment for the current year. You can file the tax return for 2023 by March 1 of the following year; in this case, you don’t have to pay the quarterly tax payments of 2023 on the due dates set in the schedule above.
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Form 1040-ES is the best tool to calculate your quarterly tax payments for 2023. A worksheet is available in the form’s instructions, and it can help you start your calculations. Your prior year’s tax return can be helpful if you look at it as a general guide. It would be best if you did the calculations according to what you expect to earn in 2023. If your estimate is not typical (too high or too low), complete another form and do the calculations again to understand the estimated tax payments better. Sometimes, there are changes to your situation or the tax laws, and these changes will affect your liabilities. You have to recalculate the estimated taxes in the case of these changes.
Form 1040-ES can help you find the best method of Payment. You can pay your estimated taxes in different ways, including debit cards, cash, check, and more. There are also electronic options to pay online. All the payment methods are described in the instructions on the form. Electronic Payment is the fastest way to pay, and if you have any tax refund, you will receive it much quicker with this payment method.
If you don’t pay enough estimated tax payments during the year, severe penalties await you. There’s no way to avoid taxes, so it is wise to pay them on the due dates. The penalty won’t be applied when your debt is less than $1000. There’s also no penalty if your tax payments in 2023 are at least 90% of the liabilities of the current year or equal to 100% of the 2022 tax return.
Be aware of the state taxes
Some states have no income tax, but others are different, and you have to pay state-estimated taxes. The deadlines for state taxes are different from federal due dates. So you must check your state’s dates with a tax agency to avoid delays and penalties.
Tax regulations constantly change, and these modifications are so fast that ordinary people can’t keep up with them. So you will surely need help from tax professionals.
It is recommended to pay your estimated taxes online due to its safety and rapidity. Online payments in today’s world are much more accessible than traditional payments. Unfortunately, there are still individuals who prefer to mail their forms. The following addresses are for the people who want to mail their 1040-ES Forms. Remember that the addresses are different according to the resident state of the sender.
| If you live in… | And you ARE NOT enclosing a payment use this address | and you ARE enclosing a payment use this address |
|---|---|---|
| Arkansas, Connecticut, Delaware, District of Columbia, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, Oklahoma, Rhode Island, Vermont, Virginia, West Virginia, Wisconsin | Department of the Treasury Internal Revenue Service Kansas City, MO 64999-0002 | Internal Revenue Service P.O. Box 931100 Louisville, KY 40293-1100 |
| Pennsylvania | Department of the Treasury Internal Revenue Service Kansas City, MO 64999-0002 | Internal Revenue Service P. O. Box 802501 Cincinnati, OH 45280-2501 |
| Florida, Louisiana, Mississippi, Texas | Department of the Treasury Internal Revenue Service Austin, TX 73301-0002 | Internal Revenue Service P.O. Box;1214 Charlotte, NC 28201-1214 |
| Alabama, Georgia, North Carolina, South Carolina, Tennessee | Department of the Treasury Internal Revenue Service Kansas City, MO 64999-0002 | Internal Revenue Service P O Box 1214 Charlotte, NC 28201-1214 |
| Arizona, New Mexico | Department of the Treasury Internal Revenue Service Austin, TX 73301-0002 | Internal Revenue Service P O Box 802501 Cincinnati, OH 45280-2501 |
| Alaska, California,Colorado, Hawaii, Idaho, Kansas, Michigan, Montana, Nebraska, Nevada, Ohio, Oregon, North Dakota, South Dakota, Utah, Washington, Wyoming | Department of the Treasury Internal Revenue Service Ogden, UT 84201-0002 | Internal Revenue Service P O Box 802501 Cincinnati, OH 45280-2501 |
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