Not everyone sends in estimated tax payments. Normally your tax advisor will help determine if your tax withholdings from income are enough, or if you should be sending the IRS (or the FTB) quarterly withholdings.
You may have to make estimated tax payments if you earn income that is not subject to withholding, such as income from self-employment, interest, dividends, alimony, rent, realized investment gains, prizes, and awards.
You also may have to pay estimated taxes if your income tax withholding on salary, pension, or other income is not enough, or if you had a tax liability for the prior year. Please consult a professional with tax expertise regarding your individual situation.
Side note: there is a difference between a tax preparer and a tax advisor.
A tax preparer simply asks for your tax documents in the beginning of the year and files your taxes every April.
A tax advisor will work with the financial planning team before the calendar year is even over and strategize on taxes ahead of time.
If you need a referral to a good tax advisor, let me know.
This information is not legal or tax advice. 1
If you are making quarterly payments to the IRS, here are a few helpful points.
Due Dates for 2022 Estimated Payments 2
- Q1 - April 18, 2022
- Q2 - June 15, 2022
- Q3 - September 15, 2022
- Q4 - January 17, 2023
Tax Tip: To help keep each of your payments straight, and for when the check "got lost in the mail", I like the idea of paying an extra dollar according to the quarter being paid. For instance, instead of making 4 payments of $1,000 each, the quarterly payment amounts would be:
- Q1 - $1,001
- Q2 - $1,002
- Q3 - $1,003
- Q4 - $1,004
Just be sure to make those payments on time.
If you are not sure how much you should be withholding on your earned income, the new IRS withholding calculator is actually really intuitive:
https://www.irs.gov/individuals/tax-withholding-estimator
(or just Google "IRA withholding calculator" and it should come up on the irs.gov site)
I don't compliment the IRS very often, but they deserve at least a small applause for this tool.
1. Just to note again in the fine print, this is not legal or tax advice.
2. https://www.irs.gov/faqs/estimated-tax/individuals/individuals-2