PHOENIX — The Internal Revenue Service today reminded taxpayers who need to make quarterly estimated tax payments that their next payment is due Friday, Sept. 15.
Most often, self-employed people, including those involved in the sharing economy, need to pay their taxes quarterly. Similarly, investors and retirees, as well as others with a substantial amount of income that is not subject to withholding, often need to make these payments. Besides self-employed income, other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income.
Some people who haven't made estimated tax payments in the past may want to consider making them now. This includes many of those who had a large amount due when they filed their 2016 return. Taxpayers who receive most of their income late in the year should also consider this option.
People who received an estimated tax penalty notice (CP30) this summer from the IRS should also consider making these quarterly payments. Normally, this penalty applies to those who pay too little of their total tax, usually less than 90 percent, during the year through withholding, estimated tax payments or a combination of the two.
Exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers, fishers, casualty and disaster victims, those who recently became disabled, recent retirees, those who base their payments on last year's tax and those who receive income unevenly during the year. See Form 2210 and its instructions for more information.
For tax-year 2017, estimated tax payments are due April 18, June 15 and Sept. 15, 2017, and Jan. 16, 2018. Use Form 1040-ES to figure these payments.
Victims of Hurricanes Harvey and Irma and other recent disasters have more time to make these payments, without penalty. Visit the special Hurricane Harvey and Hurricane Irma pages and the disaster relief page on IRS.gov for details.
The fastest and easiest way to make estimated tax payments is to do so electronically using IRS Direct Pay or the Treasury Department's Electronic Federal Tax Payment System (EFTPS). For information on other payment options, visit IRS.gov/payments. For those who choose to pay by check, be sure to make the check payable to the United States Treasury.
Many taxpayers, such as employees who may have additional income that is not subject to withholding can choose to forgo making estimated tax payments and instead increase the amount of income tax withheld from their pay. Employees can do this by filling out a new Form W-4 and giving it to their employer. Similarly, recipients of pensions and annuities can make this change by filling out Form W-4P and giving it to their payer.
In either case, taxpayers can typically increase their withholding by claiming fewer allowances on their withholding form. If that's not enough, they can also ask employers or payers to withhold an additional flat dollar amount each pay period. For help determining the right amount to withhold, check out the Withholding Calculator on IRS.gov.
Taxpayers who receive Social Security benefits, unemployment compensation and certain other government payments can also choose to have federal tax taken out by filling out Form W-4V and giving it to their payer. Some restrictions apply, so see the form and its instructions for details.
More information about tax withholding and estimated tax can also be found in Publication 505, available on IRS.gov.