IRS reminder: Third estimated tax payment due Sept. 16; disaster-area taxpayers have more time
The IRS also reminded taxpayers affected by disasters in 17 states, Puerto Rico and the Virgin Islands that they may automatically qualify for a delayed tax-payment deadline. Deadlines vary depending upon the disaster and locality.
Taxes must be paid as income is earned or received during the year, either through withholding or estimated tax payments. Taxpayers such as gig workers, sole proprietors, retirees, partners and S corporation shareholders generally should make estimated tax payments if they expect to have a tax liability of $1,000 or more when they file their return.
A general rule of thumb is that taxpayers should make estimated tax payments if they expect:
- To owe at least $1,000 in taxes for 2024 after subtracting their withholding and tax credits.
- Their withholding and tax credits to be less than the smaller of:
- 90% of the tax to be shown on their 2024 tax return or
- 100% of the tax shown on their complete 12-month 2023 tax return.
Figuring estimated tax
To figure estimated tax, taxpayers calculate their expected adjusted gross income (AGI), taxable income, taxes, deductions and credits for the year. To figure 2024's estimated tax, it may be helpful to use income, deductions and credits from 2023 as a starting point.
Taxpayers can use the tools on IRS.gov to check if they’re required to pay estimated taxes. The Tax Withholding Estimator, the IRS Interactive Tax Assistant and the worksheet in Form 1040-ES, Estimated Tax for Individuals, all offer clear step-by-step instructions.
Payment options
The IRS encourages taxpayers earning income not normally subject to withholding to consider making estimated tax payments throughout the year to stay current and avoid a surprise at tax time.
An electronic payment is the easiest, fastest and most secure way to make an estimated tax payment. The Payments page on IRS.gov provides complete tax payment information, how and when to pay, payment options and more.
Taxpayers can securely log into their IRS Online Account or use IRS Direct Pay to submit a payment from their checking or savings account. Taxpayers can also pay using a debit card, credit card or digital wallet.
Direct Pay and the pay by debit card, credit card or digital wallet options are available online at IRS.gov/payments and through the IRS2Go app. Taxpayers should note that the payment processor, not the IRS, charges a fee for debit and credit card payments
Taxpayers can also use the Electronic Federal Tax Payment System (EFTPS) to make an estimated tax payment. Payment by check or money order made payable to the "United States Treasury" is also an option.
Avoid a penalty for underpayment
Taxpayers who underpay their taxes may have to pay a penalty regardless of whether they paid through withholding or through estimated tax payments. Late and skipped estimated tax payments can incur penalties even if a refund is due when a tax return is filed.
Taxpayers should use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if they owe a penalty. Taxpayers can also request a waiver of the penalty if they underpaid because of unusual circumstances and not willful neglect.
Special rules apply to some groups of taxpayers such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year.
Disaster-area taxpayers get more time
Taxpayers who live, work or have a business in a disaster-area locality automatically qualify for a delayed tax-payment deadline. Deadlines vary depending upon the disaster and locality. Currently:
- Taxpayers in parts of Arkansas, Iowa, Mississippi, New Mexico, Oklahoma, Texas and West Virginia have until Nov. 1, 2024, to make their estimated tax payment and
- Taxpayers in all or parts of Florida, Georgia, Kentucky, Minnesota, Missouri, North Carolina, Puerto Rico, South Carolina, South Dakota, Texas, Vermont and the Virgin Islands have until Feb. 3, 2025, to make their estimated tax payment.
For details on all recent disaster relief, visit the Around the nation page on IRS.gov.
1099-Ks for payments received in 2024
Taxpayers who were paid by payment apps and online marketplaces or received any amount by payment cards could receive a Form 1099-K, Payment Card and Third Party Network Transactions, for reporting payments received in 2024. This includes anyone with a “side hustle,” sole proprietors and anyone selling goods and services online.
Taxpayers must report their income, unless it's excluded by law, regardless of whether they receive a Form 1099-K or any other third-party reporting document. The 1099-K reporting threshold for third party reporting doesn't change what counts as income or how tax is calculated. Find more information at Understanding Your Form 1099-K.
The fourth and final estimated tax payment for tax year 2024 is due on Jan. 15, 2025.