Tax Year 2024: Estimated Tax

For the tax year 2024, estimated tax payments are essential for individuals who anticipate owing at least $1,000 in taxes after accounting for withholding and refundable credits. Here are the key points regarding estimated tax payments:

• Purpose of Estimated Tax

 Estimated tax is a method used to pay taxes on income that isn’t subject to withholding. This includes earnings from self-employment, interest, dividends, rents, alimony, and other sources.

• Who Must Make Estimated Tax Payments:
  • U.S. citizens and resident aliens.
  • Residents of Puerto Rico, the U.S. Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.
  • Nonresident aliens (use Form 1040-ES (NR)).
• General Rule:
  • You must pay estimated tax for 2024 if both of the following apply:
    • You expect to owe at least $1,000 in tax for 2024, after subtracting your withholding and refundable credits.
    • You expect your withholding and refundable credits to be less than the smaller of:
      • 90% of the tax to be shown on your 2024 tax return, or
      • 100% of the tax shown on your 2023 tax return (which must cover all 12 months).
• Exceptions:
  • You don’t have to pay estimated tax for 2024 if you were a U.S. citizen or resident alien for all of 2023 and had no tax liability for the full 12-month 2023 tax year (i.e., your total tax was zero or you didn’t have to file an income tax return).
• Special Rules:
  • Farmers and fishermen: If at least two-thirds of your gross income for 2023 or 2024 is from farming or fishing, substitute 66⅔% for 90% in the general rule.
  • Household employers: Include household employment taxes when estimating your 2024 tax return if applicable.
• Due Dates for Estimated Tax Payments in 2024:

• April 15, 2024
• June 17, 2024
• September 16, 2024
• Final quarterly payment due in January 2025

• References:
  • Refer Form 1040- ES : Estimated Tax for Individuals -> 2024 Form 1040-ES (irs.gov)
  • Refer -> Pay As You Go, So You Won’t Owe: A Guide to Withholding, Estimated Taxes, and Ways to Avoid the Estimated Tax Penalty | Internal Revenue Service (irs.gov)
• Let us know if we can help you?

Contact Surya Padhi at Sure Financials for any questions and clarification. Surya Padhi is an expert who keeps current on tax law changes as well as a member of the National Association of Tax Professionals National Association of Tax Professionals (NATP) and  New Homepage – National Association of Enrolled Agents (naea.org). Visit Welcome | Sure Financials & Tax Services, LLC (surefintaxsvs.com) for more information and contact us by calling +1908.955.0696.