Home | Taking the Mystery Away from Individual Estimated Tax Payments

Taking the Mystery Away from Individual Estimated Tax Payments

Oct 07, 2022

When it comes to tax debt, one area which seems to generate a great deal of confusion for taxpayers is Individual Estimated Tax Payments. This could be because many people don’t understand when they need to pay estimated taxes or how to calculate them.

Part of our mission at Golden Lion Tax Solutions is to always educate our clients, giving them the knowledge and understanding to move forward with the correct tax debt solutions and to make sure they know how to avoid those issues in the future. With that in mind, let’s take a closer look at Individual Estimated Tax Payments and their associated penalties.

Who Pays Individual Estimated Tax Payments?

As an individual, you may need to pay Individual Estimated Tax Payments in the event that the amount of income tax your employer has withheld from your paycheck is insufficient. You may also have to make Estimated Tax Payments if you have received any additional income from interest, dividends, capital gains, or other sources where income tax is not withheld. If you are a sole proprietor, partner, member, or corporate shareholder, taxes are not withheld from your earnings or distributions, so you have the obligation to also address Estimated Tax Payments as applicable.

How to Calculate Estimated Tax Payments

To calculate an Estimated Tax Payment, the individual must first estimate their expected taxable income for the year. This should always factor in any deductions and credits that will apply.

If you believe your income situation will be similar, the best reference point to use is a copy of your prior year's income tax return. If you believe your income situation will differ from your prior year's tax situation, we recommend consulting with your Accountant or CPA.

As a general rule of thumb, taxpayers will be required to pay a minimum of 90% of their taxes for the current year by January 15th of the following year. Sometimes, taxpayers may pre-pay a ‘safe harbor’ amount equaling 100% of the previous year’s taxes. This can help to avoid underpayment penalties. The safe harbor amount changes to 110% if you are considered a high-income taxpayer. High-income taxpayers are those who have a gross income of $150,000 or higher. If you are married and filing separate tax returns, the high-income taxpayer figure reduces to $75,000 or more.

Making Estimated Tax Payments

If you are required to make Estimated Tax Payments, you must make a minimum of four payments per year, with each payment due no later than the following due dates:

  • April 15th
  • June 15th
  • September 15th
  • January 15th (of the following year)

Various payment methods can be used, including online payments, over the phone, and even mailing a check. If it is more convenient to make payments more frequently, maybe monthly or bi-weekly, then it is possible to do so as long as the amounts total the required sum for the corresponding due date.

What is an Underpayment Penalty?

An underpayment penalty may be assessed if an individual has not paid the required tax amount by the corresponding due date. The penalty itself is calculated based on the amount of underpaid taxes owed and the period those taxes were due; interest will also be assessed at the rate established quarterly by Congress.

Why Choose Golden Lion Tax Solutions?

If you are facing an underpayment penalty for Estimated Tax Payments, or any other type of tax debt, Golden Lion Tax Solutions is here to help. In some cases, it may be possible to appeal the penalty if we can prove that extreme circumstances were behind your failure to make your Estimated Tax Payments.

Nobody has to face tax debt alone. Our team of licensed tax professionals has a trusted and proven process to help you find the best solutions to resolve IRS or State tax debt. We have over 22 years of experience in the industry and know exactly how to navigate the stormy waters of tax debt. We will be your partner, guiding you to the right solution and educating you on how you can avoid future tax debt concerns. Let’s start now and bring you a renewed peace of mind!


Trust. Protection. Wisdom.

Your future and your family deserve the right protection. Golden Lion Tax Solutions will be your advisor and confidant throughout the entire journey. We guarantee to offer you or your business best-case solutions for your tax debt. We are by your side every step of the way. Start now and get your life back.

For help with your tax debts, email contactus@goldenliontaxsolutions.com or call 833-LION-TAX (833-546-6829)

Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.