Get the free COMPUTATION OF ESTIMATED TAX DUE

01118 (Rev.408/16)TEXAS SALES AND USE TAX PREPAYMENT REPORTING FORMER Fields. Taxpayer number. Taxpayer name c. Period ending. Date computation OF ESTIMATED TAX DUE. DO NOT WRITE IN SHADED AREAS.ESTIMATED

How to fill out computation of estimated tax

How to fill out computation of estimated tax:

1. Start by gathering all the necessary documents and information required to accurately calculate your estimated tax. This typically includes your previous year's tax return, income statements such as W-2s, 1099 forms, and any other relevant financial documents.
2. Determine whether you are eligible to file estimated taxes. Generally, individuals who expect to owe $1,000 or more in taxes after subtracting their withholding and refundable credits are required to make estimated tax payments.
3. Calculate your estimated taxable income. This is done by estimating your total income for the year and subtracting any applicable deductions and credits. It's important to use a reliable estimate to ensure your calculations are accurate.
4. Estimate your tax liability by applying the appropriate tax rates and brackets to your estimated taxable income. The tax rates vary depending on your filing status and income level, so be sure to use the correct rates provided by the IRS.
5. Subtract any estimated tax credits you may be eligible for, such as the Child Tax Credit or the Earned Income Tax Credit. These credits can significantly reduce your overall tax liability.
6. Divide your estimated tax liability by the number of payment periods in a year. For most individuals, this is typically four payment periods, corresponding to the IRS's quarterly due dates. This will give you an estimation of how much you should pay for each period.
7. Fill out the appropriate sections of Form 1040-ES, Estimated Tax for Individuals, provided by the IRS. This form helps you calculate your estimated tax liability and provides payment vouchers for each quarterly payment period. Be sure to accurately enter all the required information.
8. Make your estimated tax payments on time. The IRS provides specific due dates for each quarterly payment period, generally falling on April 15th, June 15th, September 15th, and January 15th of the following year. You can make these payments electronically or by mailing your payment and voucher to the designated IRS address.

Who needs computation of estimated tax:

1. Self-employed individuals: If you are self-employed and expect to owe $1,000 or more in taxes after subtracting your withholding and refundable credits, you are required to make estimated tax payments.
2. Freelancers and independent contractors: Similar to self-employed individuals, freelancers and independent contractors must estimate and pay their taxes quarterly if they expect to owe $1,000 or more.
3. Those with significant investment income: If you receive significant investment income, such as dividends, capital gains, or rental income, you may need to make estimated tax payments to cover your tax liability.
4. Those with other sources of income without tax withholding: If you have income from sources that do not withhold taxes, like rental properties or unemployment benefits, you may need to make estimated tax payments to ensure you are meeting your tax obligations.
5. Individuals with complex tax situations: If you have a complex tax situation, such as various sources of income, multiple jobs, or significant deductions and credits, computing estimated taxes can help you figure out and stay on top of your tax liability.

Remember, it's always a good idea to consult with a tax professional or utilize tax software to ensure accurate calculations and compliance with IRS rules and regulations.

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