How do I know if I need to pay estimated taxes?

In California, individuals with income that is not subject to withholding tax must pay estimated taxes. This includes income from self-employment, interest, dividends, rental income, gains/losses from sale of business/investment/property, and alimony. If you meet the following criteria, you may need to pay estimated taxes: 1. You expect to owe at least $500 in taxes, or 2. You had tax liability in the prior year (even if you only paid withheld taxes and not estimated taxes) If you’re uncertain whether you need to pay estimated taxes, consult with a tax professional or review the relevant tax forms. To calculate how much you are expected to owe in taxes, you can either use the Tax Tool on the California Franchise Tax Board website, or use the 1040-ES Estimated Tax Worksheet. On the worksheet, you need to list your yearly estimated income for the current year as well as any estimated deductions, credits, and adjustment to income. You will also need to fill in your prior year’s tax liability and any taxes withheld from your current income. Once you’ve completed the worksheet, it will tell you whether or not you need to pay estimated taxes and how much in taxes you should pay. The due dates for estimated tax payment vary depending on the year, so it is important to double-check the due dates in advance so you can set aside the funds on time.

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How do I know if I need to pay estimated taxes?

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