The Internal Revenue Service authorizes a special form that helps declarants calculate and settle estimated taxes for the running year. This document is recognized as the Estimated Tax for Individuals or Form 1040-ES. You are liable to prepare this report if you are an independent proprietor, a freelancer, or a self-employed individual in case your estimated tax exceeds 1,000 USD.
When Is Form 1040-ES Needed?
Following the IRS recommendations, the Form 1040-ES is prepared when both below-listed conditions are satisfied:
- The proposed tax should exceed 1,000 USD after the withholdings and refundable credits are deducted.
- The withholdings and refundable credits are likely not above either 90 percent of the amount for the running tax calendar year or 100 percent of the tax for the previous calendar year (full 12 months).
Payment Methods
The Internal Revenue Service authorizes several payment methods. You are welcome to select among the following to settle the estimated tax:
1. IRS Direct Pay
Find this payment method on the official IRS website and settle the taxes paying no extra fees for the transaction.
2. Credit and Debit Cards
IRS offers dependable online providers to settle the tax, but you will need to cover processing charges.
3. EFTPS
If you get registered with the Electronic Federal Tax Payment System, you can benefit from working online. Selecting this method allows you to set payments beforehand and adjust the amount (if needed) two days before the due date.
4. Check (Money Order)
You are empowered to use this method only by enclosing the orders with the voucher 1040-ES. The declarant should enter their name, SSN, and “[Current Year] 1040-ES” on the check.
5. Prior Year’s Overpayment
Use the credit to cover the estimated tax for the current period.
6. Electronic Money Withdrawal (EFW)
The declarant is offered to settle this method of payment while submitting the filing.
7. By Phone
8. Pay by Cash
The last two payment methods are executed by licensed IRS providers. You can find the contact information inside the 1040-ES document.
Filling Out IRS Form 1040-ES
Completing the 1040-ES report is a straightforward and intuitive process. Still, it might be challenging for some declarants, as the paperwork consists of several parts. Below is the list of components compulsory for the taxpayers to accomplish:
- Estimated Tax Ledger
- Tax Rate Schedules
This section is needed to calculate the estimated tax.
- Self-Employment Tax and Deduction Ledger
The worksheet is used to specify units 1 and 9 of the Estimated Tax Ledger.
- Record of Estimated Tax Payments
- Four 1040-ES Vouchers
The compilation also includes a vast instruction section.
Here, you will find a clear directive for preparing and serving the 1040-ES report and related payments.
1. Download an Up-to-Date PDF File
We empower you to use our advanced software to generate and download the respected 1040-ES form.
2. Prepare the Self-Employment Tax and Deduction Ledger
Proceed to page “6” to accomplish the worksheet. Study the instructions carefully to submit the needed data in the Self-Employment Tax Deduction ledger. Specify the expected amounts next to each unit and provide the calculations required:
- Expected profits that are subject to self-employment charges.
- Conservation Reserve Program amounts (applicable for those who hold farm profits and social benefit refunds).
- Wages you suppose to get that is subject to SS tax or railroad retirement rate.
- Calculation requested in units 2-4 and 7-11.
The SS Tax Maximum profit is already committed to the form and equals 137,700 USD.
3. Complete the Estimated Tax Ledger
Begin completing the worksheet on page “8” after you read the guidelines on page “5-6.” The Estimated Tax ledger consists of 15 units and blank space that you can utilize to provide the answers next to each question.
You should turn to the Tax Rate Schedules on page “7” to estimate and calculate the amount in section “3” and “4.”
4. Prepare the Record for Estimated Tax Payments Section
Completing this section relies on results submitted in unit 14 (a-b) of the Estimated Tax sheet. If, after the calculations, your amounts satisfy the requirements of the “Yes” boxes, you are not obliged to provide the Estimated Tax Payments data.
However, if your amounts exceed 1,000 USD, follow the instructions, and complete the Estimated Tax Payments Record. The table contains five horizontal lines specifying the due date period and the total. To meet the demands of the worksheet, you need to enter the following info:
- Amount due
- Date of payment
- Confirmation info proving the payment
- Funds paid
- Info, if you paid with the previous year’s overpayment credit.
- Total
5. Render the 1040-ES Voucher
Select the appropriate type of voucher depending on the due date you provide payments for. Consider the info at the upper right corner of each voucher to adjust the needed alternative.
Once you have chosen the voucher type, you should enter the following data:
- Enter the amount in a dollar-cent format; for example, 100.00 USD.
- The declarant’s first and last name and middle initials
- SSN
- Full address, including the street and apartment (room) number, city, state, and ZIP.
- If you provide the data jointly, please, include the spouse’s name, SSN, and address using your model.
- Should you reside in a foreign country, submit the full location and postal code.
The voucher should be served to the U.S. Treasury and only if the declarant uses money order or check payment methods. Enter the declarant’s name, SSN, and “[Calendar Year] 1040-ES” on the check or money order. Also, it is vital to submit but not staple or glue the payments with the voucher.