You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. If you had a tax liability for the prior year, you may have to pay estimated tax for the current year. The IRS rule is that you must pay at least 90% of income taxes (and self-employment taxes) during the year or 100% of income taxes from last year, to avoid fines and penalties.
If you are filing as a sole proprietor, partner, S corporation shareholder and/or a self-employed individual, you should use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax.
For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.
Remember, because the business owner owes the tax, the owner must pay from his personal account.
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