Tax Form 1040ES Instructions

Elizabeth Rosen
by Elizabeth Rosen, Contributor

How to Calculate Estimated Tax for Form 1040ES

To calculate your Estimated Tax, you must know your expected Adjusted Gross Income (AGI), taxable income, taxes, deductions, and tax credits for the year.

When determining your Estimated Tax for the current year, it may help to use your prior year income tax return as a guide – using the information from that return as a starting point (for income, deductions and credits). You may also use the worksheet on Form 1040-ES to figure your Estimated Tax.

You will need to estimate the amount of income that you expect to earn for the year. If you estimated your earning too high or too low, simply complete another Form 1040-ES worksheet to recalculate your Estimated Tax for the next quarter. Keep in mind, you want to try to estimate your income as accurately as possible, to avoid being subject to penalties.

Note that you are required to make adjustments for changes in your personal situation as well as any recent changes to the tax law.

When to Pay Estimated Tax

Estimated Tax payments are made in 4 quarterly installments. Each payment period has a specific due date. If you fail to pay enough tax by the quarterly deadlines, you may be charged a penalty (even if you are owed a tax refund when you file your income tax return).

Estimated Tax payments are due on the 15th day of the 4th, 6th, and 9th months of your tax year, and on the 15th day of the 1st month after your tax year ends. Typically, these dates fall on April 15th, June 15th, September 15th, and January 15th.

How to Pay Estimated Taxes

The following individuals should use IRS Tax Form 1040-ES to figure and pay Estimated Tax:

  • Sole proprietors
  • Partners
  • S-corporation shareholders
  • Self-employed individuals

If you are filing as a Corporation, you should use IRS Tax Form 1120-W to calculate your Estimated Tax. Note that a corporation’s Estimated Tax payments must be deposited electronically. For more information, see IRS Publication 542 (Corporations) and/or the Instructions for Form 110-W.

Both individuals and businesses can pay their Estimated Tax online using the Electronic Federal Tax Payment System (EFTPS).