Wednesday, June 9, 2021
The US Internal Revenue Service has issued a reminder to taxpayers who pay estimated taxes that they have until June 15 to pay their estimated tax payment for the second quarter of tax year 2021 without incurring a penalty.
Estimated tax is the method used to pay tax on income that isn't subject to withholding, including income from self-employment, interest, dividends, rent, gains from the sale of assets, prizes, and awards. Taxpayers may also have to pay estimated tax if the amount of income tax withheld from a salary, pension, or from other income isn't sufficient.
Individuals, including sole proprietors, partners, and S corporation shareholders, can avoid an underpayment penalty by owing less than USD1,000 at tax time or by paying most of their taxes during the year.
Special rules apply to some groups of taxpayers, such as farmers, fishermen, certain higher income taxpayers, casualty and disaster victims, those who recently became disabled, recent retirees, and those who receive income unevenly during the year.
Generally, taxpayers should make estimated tax payments in four equal amounts to avoid a penalty. Third quarter payments are due September 15 and the final estimated tax payment for tax year 2021 is due on January 17, 2022.