Estimated tax is used to pay both income tax and self-employment tax, reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged an underpayment penalty.

Who Must Pay Estimated Tax

You must pay estimated tax for 2009 if both of the following apply.

1. You expect to owe at least $1000 in tax for 2009 after subtracting your withholding and credits.
2. You expect your withholding and credits to be less than the smaller of;
   
   • 90% of the tax to be shown on your 2009 tax return, or
   • 100% of the tax shown on your 2008 tax return. Your 2008 tax return must cover all 12 months.

   If you are self employed, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.

   Who Does Not Have To Pay Estimated Tax

   If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings.

   How To Figure Estimated Tax

   To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.

   When To Pay Estimated Taxes

   For Estimated tax purposes, the year is divided into four payment periods. The due dates are:
   

   • April 15
   • June 15
   • September 15
   • January 15 the next year

   If you do not pay by the due date of each of the payment periods, you may be charged a late payment penalty even if you are due a refund when you file your income tax return.