We are now exiting June, and many may be surprised to find that we were a little busier over the past month than usual. (We swear it’s not all beaches and margaritas after April, but not everyone believes us). You see, we got a pretty steady flood of questions around mid-month when quarterly estimated tax payments were due.

This does not affect every taxpayer, as many have enough taxes being taken out of their paychecks to cover their annual tax bill. If this is you, congratulations, you are all set and we can’t wait see you next tax season.

This is not everyone, though, and for the rest of you the IRS would like you to be checking in quarterly (well, not quite quarterly, but four times per year, more on that later). So let’s start with the agency’s two rules for requiring you to make quarterly estimated payments, which sound a little complicated, but if they take them individually they are not too bad. And keep in mind that both situations have to apply for you to fall in the group that must make payments.

First, you must expect to owe at least $1,000 in federal tax for the year, after subtracting federal tax withholding and refundable credits. In easier terms, if you expect to be making at least a $1,000 payment before next April 15^th, this is you.

Second, you must expect that your federal withholding and refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2016 return or 100% of the tax shown of your 2015 return (if it was for a full 12 months). This just means the IRS wants to be sure they are getting enough money to cover their expected bill. The government isn’t too keen on you keeping that money for now, they would rather get the interest.

Now we get back to when these payments are supposed to be made. The first two for this year (covering  the periods from January 1-March 31 and April 1-May 31) already passed. There are upcoming due dates of September 15 for the period covering June 1-August 31 and January 17, 2017 for the rest of 2016.

Making these payments is done by estimating your adjusted gross income, taxable income, taxes, deductions and credits for the calendar year. This is done on Form 1040-ES, which includes an estimated tax worksheet. It also includes instructions that go way more in depth than is suitable for this space. It sometimes does it in language that is typical government-ese, however, so remember we are in your corner if you need help navigating it.

A large number of those who are affected by this situation are the self-employed. If you are not receiving a paycheck from an employer, the IRS is missing out on the tax payments that would come along with it and it would like to get some of its taste through the year. This is an unavoidable aspect of being self-employed, but instead of thinking of this as an unnecessary burden, try to frame it as being proud that you are successful enough to be earning enough money that you fit in this schema.

If you are not self-employed and still fit the IRS’ rules for these quarterly payments, though, maybe you would like to increase your withholding to cover the liability. The government is always happy to take more money from your check, after all. Again, feel free to contact us if you want some guidance on figuring out what you should be paying, and from there it can be easily changed with your company’s payroll department.

So until September 15 ….