The fourth payment of estimated taxes for tax year 2015, is due January 15, 2016.
The scheduled payment due dates have been:
- 1st payment …………….. April 15, 2015
- 2nd payment ……………. June 15, 2015
- 3rd payment …………….. Sept. 15, 2015
- 4th payment …………….. Jan. 15, 2016
However, this fourth payment need not be made if you file your 2015 tax return by February 1, 2016, and pay the entire balance due with your return.
Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.
Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. If you do not pay enough by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your tax return.
Who must file and pay estimated taxes? The general rule is that you must pay estimated tax for 2015 if both of the following apply:
- You expect to owe at least $1,000 in tax for 2015, after subtracting your withholding and refundable credits, and
- You expect your withholding and refundable credits to be less than the smaller of:
- a. 90% of the tax to be shown on your 2015 tax return,
- b. 100% of the tax shown on your 2014 tax return. Your 2014 tax return must cover all 12 months.
The above does not apply for farmers, fishermen, or higher income taxpayers (adjusted gross income for 2014 was more than $150,000); special rules must be used. The special rule for higher income taxpayers necessitates the use of 110% instead of 100% in “b.” (above).
To be continued….
Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.