Pay your best estimate to IRS / When am I required to make estimated tax payments to the IRS?

BostonHerald.com writes:  Tax season is upon us and the Herald’s TaxSmart experts are here every Friday to help.  Today, Jonathan Gorski of Boston-based Edelstein & Co. discusses estimated tax payments to the Internal Revenue Service.   Individuals are required to make estimated tax payments to the IRS if the amount of tax they pay through withholding on wages and other payments will not adequately cover their tax liability for the year.

To avoid interest and penalties on an underpayment of tax, individuals, in the current year, are required to pay the lower of a) 90 percent of their current year tax; or b) 100 percent of the prior year tax.  If the taxpayer’s adjusted gross income (AGI) for the prior year was more than $150,000 ($75,000 if the taxpayer’s current year filing status is married filing separately), substitute 110 percent for 100 percent in the previous sentence.

Taxpayers typically make estimated tax payments on a quarterly basis. There are special rules for farmers and fishermen. Planning tip: The IRS requires you to pay your taxes “as you go” throughout the year.  This is essentially the purposes of federal withholdings as they are treated as payments made evenly throughout the year.

If you become aware that your withholdings and estimated tax payments aren’t enough to cover your income tax liability and/or interest and penalties from an estimated tax underpayment for the year, speak to your tax advisor about remitting additional amounts of federal income taxes through withholdings.  Taxpayers are usually able to withhold extra amounts on their W-2 wages and required minimum distributions (RMD’s) from their retirement plans.