I pay estimated taxes online; but this year my business grew so I will have to pay more. How can I do this online? Which form do I pick for Federal/NYS State?

  • What not just add more to the next quarterly payment? – JTP - Apologise to Monica Feb 10 '15 at 17:16
  • @JoeTaxpayer is that the normal way to do it? I just wasn't sure as I haven't done this before. That sounds easy enough. – Chris Muench Feb 10 '15 at 17:25
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    I think you should be fine (that is, not have an underpayment penalty) as long as what you did pay is at least 90/100% (don't remember offhand which it is, but it's in the IRS instructions) of last year's tax liability. In fact, that's what I do. Because my income is both irregular and unpredictible, I've never been able to use their estimated tax calculation. So I just divide last year's tax by 4, and send that in every quarter. – jamesqf Feb 10 '15 at 18:48
  • @Chris Muench: Note that what I do only applies to Federal tax. I know nothing about New York State taxes. – jamesqf Feb 10 '15 at 20:46

If you qualify for the safe harbor, you are not required to pay additional quarterly taxes. Of course, you're still welcome to do so if you're sure you'll owe them; however, you will not be penalized.

If your income is over $150k (joint) or $75k (single), your safe harbor is:

Estimated tax safe harbor for higher income taxpayers. If your 2014 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2015 or 110% of the tax shown on your 2014 return to avoid an estimated tax penalty.

Generally, if you're under that level, the following reasons suggest you will not owe the tax (from the IRS publication 505):

  • The total of your withholding and timely estimated tax payments was at least as much as your 2013 tax. (See Special rules for certain individuals for higher income taxpayers and farmers and fishermen.)

  • The tax balance due on your 2014 return is no more than 10% of your total 2014 tax, and you paid all required estimated tax payments on time.

  • Your total tax for 2014 (defined later) minus your withholding is less than $1,000.

  • You did not have a tax liability for 2013.

  • You did not have any withholding taxes and your current year tax (less any household employment taxes) is less than $1,000.

If you paid one-fourth of your last year's taxes (or of 110% of your last-year's taxes) in estimated taxes for each quarter prior to this one, you should be fine as far as penalties go, and can simply add the excess you know you will owe to the next check.

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