Estimated tax payments are in place to ensure that the taxpayer is on the pay-as-you-go method since taxes must be paid as income is earned.
A corporation must estimate its taxable income for each quarter and are required to make estimated tax payments if they expect to owe at least $500 or more in taxes when their return is filed. Quarterly estimated tax payments are due by the 15th day of April, June, September and December for calendar year taxpayers.
Corporations must make estimated tax payments electronically by one of the following methods:
- EFTPS Online – the Electronic Funds Tax Payment System is a free tax payment system that offers online tax payments or a voice response system for making payments. Taxpayers must register with the system in advance to set up the necessary information.
- If you are required to make deposits electronically but do not wish to use the EFTPS tax payment service, ask your financial institution about an ACH Credit or same-day wire payments. These options may result in additional fees and could require additional processing time.
It is important to note that the “safe-harbor” option individual taxpayers often utilize is not available to corporations.
Corporations are required to remit payments equal to 100 percent of their current year tax. Payments can vary each quarter based on how income is earned for the covered period. Corporations that do not make estimated tax payments or pay enough throughout the year may be subject to an underpayment penalty for the period of the underpayment.
If you are expecting a year with higher than usual income amounts, please contact Tronconi Segarra & Associates for help determining the appropriate amount of estimated taxes to remit.