Estimated tax is the method used to pay tax on income that is not subject to withholding.
includes income from self-employment, interest, alimony, rent, gains from the sale of
assets, prizes, and awards. You also may have to pay estimated tax if the amount of income tax if your total tax being withheld from your salary, pension, or other income is not enough.
Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes. If you do not pay enough tax, either through withholding or estimated tax, or a combination of both you may have to pay a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.
As a General Rule...You must pay Estimated Tax Payments should the following 2 scenarios apply.
1) You expect to owe more than $1000.00 of tax for 2012 after subtracting withholdings and credits that are refundable.
2) Or, you expect your withholding or refundable credits to be less then the smaller of,
a. 90% of the tax to be shown on your 2012 federal tax return
b. 100% of the tax shown on your 2011 tax return. Your 2011 tax returns needs to encompass all 12 months.
The above information is furnished by Publication 505 of the Internal Revenue Code.
Depending on the nature of your income / profession may alter the withholding percentages such as fisherman, farmers or higher income taxpayers.
At the end of the day, DWK Tax Group is concerned witht the ability to have the taxpayer owe the correct amount of tax assessment. Accuracy of the assessment is critical to maximize the company's bottom line. Having the ability to avoid unnecessary penalties and interest will simply benefit the self employed individual no matter which way you spin it. After all the idea is to make money to thrive, not to pay the IRS or State.
Call us for IRS or State Tax Relief, if you feel the situation is starting to spin out of control and the attitude from whatever taxing authority is involved has become unbearable, if an issued wage levy has become unbearable...Dial toll free 1 - 8 6 6 - 2 2 6 - 6 1 0 2, we will conduct a detailed tax analysis and set you on the correct path should you retain DWK Tax Group.
Our fees are affordable, our solutions are sustainable and most importantly we will treat the tax debt as if it were our own. Affordable financing is also available.
Thank you for your time in advance...