ESTIMATED TAX PAYMENTS
As you may know, you generally cannot wait until April 15th of 2007 to pay your income taxes. The IRS and most states require you to pay a certain percentage of your taxes throughout the year by making estimated tax payments or having taxes withheld from your paycheck. Penalties are assessed for failing to do so.
Generally, you must pay estimated payments in four installments equal to 90% of your current year tax liability, or 100% of what you paid in the preceding year if the AGI was equal to or less than $150,000. If the AGI on your prior year's return was over $150,000 ($75,000 if married filing separately), the percentage requirement is 110% of the preceding year's taxes or 90% of the current year's tax, whichever is lower. The minimum threshold for paying estimated tax remains at $1,000 for 2007. There's also no penalty if other specified exceptions or waivers apply. Additionally, if you own your own business, or have fluctuating income, you will qualify to pay your estimated income taxes based on the "Annualized Basis", which lets you pay in based on when you earn your income and with seasonal businesses this can make a significant difference.
For 2007, quarterly estimated tax payments are due by the following dates:
|April 17, 2007
June 15, 2007
September 17, 2007
January 15, 2008
You can also get these due dates, along with other due dates under the "Tax Calendar" Page on this website.
Make estimated tax payments on payment-voucher Form 1040-ES or by phone using a MasterCard, American Express, or Discover Card and calling 1-888-2PAY-TAX
Remember, you can gain a larger federal deduction in 2007 if you pay your state 4th quarter estimated tax payment by December 31st and the AMT does not apply.