It is so easy to understand Estimated Tax and how it works. You do not have to make estimated taxes if you do not owe any tax. However, if you expect to owe more than $500 in taxes for the current year, you may need to make estimated payments. Online payment of IRS Estimated Tax is the most common way. It is a safer method, and your payment goes through the same day as the transaction. It is important to pay the taxes as soon as possible so that you are not penalized.
In most cases, you can pay your estimated tax in four installments. The first one is due April 15. You can make smaller installments more frequently. For example, you can pay your estimate quarterly if you are a freelancer, self-employed, or have an investment income.
How Can I Pay Estimated Tax Online?
The IRS encourages taxpayers to pay their taxes electronically. This is safe and easy to do. Online payments can be made with a credit or debit card. However, you must use an IRS-approved processor to process the payment.
- One of these online payment methods is the Electronic Federal Tax Payment System (EFTPS). You can use EFTPS to make monthly, weekly, or quarterly payments. Using the service is convenient and allows you to view your history of payments.
- Another option is the Direct Pay program. This method allows you to make payments directly from your bank account. However, this type of payment requires you to enter your routing number and checking or savings account number.
- A third option is the eCheck program. This is a secure way to pay your estimated taxes. An eCheck transaction can take a few days to process. To use this service, you will need your routing number, checking or savings account number, and a credit card number.
Regardless of your chosen payment method, you should remember to treat estimated tax payments like bills. Make sure you set a reminder to ensure that you are paying on time. Failure to do so can result in a penalty from the IRS.