Estimated Income Tax Payments for Individuals

Federal (Internal Revenue Service)

The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. There are two ways to pay as you go.

• Withholding. If you are an employee, your employer probably withholds income tax from your pay. Tax may also be withheld from certain other income, including pensions, bonuses, commissions, and gambling winnings. In each case, the amount withheld is paid to the IRS in your name.
• Estimated tax. If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. People who are in business for themselves generally will have to pay their tax this way. You may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rents, and royalties. Estimated tax is used to pay not only income tax but self-employment tax and alternative minimum tax as well.

Tax Withholding and Estimated Tax (Publication 505) explains both of these methods. It also explains how to take credit on your return for the tax that was withheld and for your estimated tax payments.

If you did not pay enough tax during the year either through withholding or by making estimated tax payments, you may have to pay a penalty.

State (Franchise Tax Board)

If you believe you may owe taxes at the end of the year, you may have to pay quarterly estimated taxes during the year or you may want to increase the amount your employer withholds from your pay check. If you're self-employed, you'll probably have to pay estimated taxes.

To find our more about paying estimated taxes, see How do I figure my estimated tax payments.

Also see How to File and Pay for Individuals.