While nearly everyone who pays estimated taxes pays them in equal installments throughout the year, you're really not required to. The payment that is due September 15th is an estimate of your taxes owed on income you received from June 1 through August 31.
You'll avoid paying interest and penalties if you pay at least the proper amounts when they come due. You'll also avoid a huge tax liability if you pay your estimated taxes as they come due and don't wait until April 15th (at which point, it could be argued, you are evading your taxes). If you have to be a little late on an estimated tax payment, better to be a little late and pay a small tax penalty than to skip filing and paying estimated taxes all together.
If you are a fiscal year taxpayer (your tax year does not follow the standard calendar year), your payment due dates are:
- The 15th day of the 4th month of your fiscal year
- The 15th day of the 6th month of your fiscal year
- The 15th day of the 9th month of your fiscal year
- The 15th day of the 1st month after the end of your fiscal year.
Special Considerations This Year
The American Recovery and Reinvestment Act of 2009 made changes that might affect your calculation of estimated tax in certain circumstances, including, but not limited to:- Those who received certain unemployment compensation. You can exclude from income the first $2,400 of qualified unemployment compensation you receive.
- Those who received any economic recovery payment who are recipients of social security, supplemental social security, railroad retirement benefits, and veterans disability compensation or pension benefits. If you receive any of these benefits, you will receive an economic recovery payment of $250. This payment is NOT included in your income.
- Making work pay credit. You can claim a refundable credit of up to $400 - $800 if married filing jointly if you work, whether you are an employee or are self-employed. The credit is 6.2% of your earned income and is phased out if your modified adjusted gross income (AGI) is more than $75,000 or $150,000 if married filing jointly.
- Those who received Hope education credits. For 2009 and 2010, the maximum credit is $2,500, the credit is available for the first 4 years of post-secondary education and 40% of the credit is refundable. The increased benefits will be phased out if your modified AGI is above $80,000 or $160,000 if married filing jointly.
- Those taking the first-time home buyer credit.
- Those who receive certain health coverage tax credits. For individuals who are eligible trade adjustment assistance (TAA) recipients, alternative TAA recipients, or eligible Pension Benefit Guaranty Corporation pension recipients, the credit for the cost of health insurance increases. This credit also is available to eligible TAA recipients who are not currently enrolled in a training program.
- Deduction for taxes paid on the purchase of new vehicles.
- Estimated tax payment adjustments for certain small businesses. For qualified small businesses (nearly any home business would seem to qualify), your required estimated tax payment for the year is the lesser of 90% of your 2008 tax or 90% of your estimated 2009 tax. This rule applies to individuals who satisfy all of the following:
- Your business had an average of fewer than 500 employees in 2008.
- More than 50% of your gross income from 2008 was income from your small business.
- Your AGI for 2008 was less than $250,000 - $500,000 if married filing jointly in 2009.
Confused or need more help? Read: Dealing with Estimated Taxes
Related:
Office in Home Tax Deductions
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