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

If you’re a resident of Virginia and you’re not an employee in a salaried position, you may need to pay estimated taxes. Estimated taxes are taxes that are paid at set times throughout the year, and they’re typically required for individuals who expect to owe taxes at the end of the year. Generally, people who earn income from sources such as freelancing, contracting, self-employment, capital gains and other non-salaried jobs need to pay estimated taxes. You can determine if you need to pay estimated taxes by calculating your expected total tax amount for the year. To do this, add up all the income you expect to earn from the aforementioned non-salaried sources, factor in any deductions or credits you expect to receive, and multiply the remaining amount by the applicable tax rate for your income bracket. For example, if you earn $25,000 from non-salaried sources this year and are in the 24% tax bracket, you would owe $6,000 in taxes. Once you calculate your expected total tax amount, you can compare this total to the amount that you’ve already paid in taxes throughout the year. If the amount you’ve already paid is less than 90% of your expected total tax amount, you’ll need to pay estimated taxes to avoid potential penalties. Otherwise, you will not need to make estimated tax payments. It’s important to keep up with the filing deadlines for estimated taxes, which are April 15th, June 15th, September 15th and January 15th.

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

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