Taxation Solutions, Inc.

(317) 279-4556

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What Is Estimated Tax?

In the United States, our tax system is pay as you go. And if you get to the end of the year, and you owe too much on your tax return, you could end up facing a penalty. Estimated taxes are a way to avoid underpayment penalties by making sure you're paying enough tax through the year.

Many taxpayers never have to worry about estimated taxes because their pay-as-you-go obligations are met by withholdings from their paychecks. However, there are many types of income that are not subject to withholding. Estimated taxes offer a way to stay on top of your tax liability for income from:

  • Self-employment
  • Interest and dividends
  • Alimony
  • Rent
  • Gains on assets sold
  • Prizes and awards

Paid quarterly, estimated tax payments provide an avenue for pre-paying the anticipated tax liability to avoid penalties.

If you're unsure whether you should be paying estimated taxes or you aren't certain how to calculate the amount you owe, Taxation Solutions, Inc. is available to come to your aid. We can help with the complicated tax situations faced by farmers and fisherpeople as well as higher-income taxpayers or with basic estimated tax calculations. Our experts are your one-stop shop for tax help.


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