Firstly, estimate your yearly income from anything subject to withholding then add taxable income from anything that isn’t subject to withholding i.e. anything from self-employment, interest, alimony, rent, etc. Any income that is exempt from tax should not be included.
It’s a good idea to use your tax return from the previous year as a guide. By subtracting the exemptions, adjustments, and deductions from your estimated gross income, you will end up with your estimated taxable income. Tax tables provided by the IRS will help you to figure out your estimated total income tax liability for the year. In order to calculate your net tax liability, you should subtract any tax credits as well as your estimated tax withholding for the year from the total income tax liability.
Estimated advance tax payments must then be made if your net tax liability after credits and withholding exceeds 10 percent of your total tax liability and is greater than $1,000. Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed. Don’t forget to divide your net tax liability by four so you have the quarterly amount. This amount is then due on April 15, June 15, September 15, and January 15 of the next year. Make sure to amend the estimated tax payment if your amount of income should change.
In order to make your advance tax payment, you can print off the 1040-ES form payment voucher from the IRS website along with a check or money order. It’s also possible to pay by direct electronic transfer, or over the phone or internet with a debit or credit card.