In general, taxation occurs from the source of income. Workers of a business or institution are taxed before they receive their income. However, some classes of people are not taxed before receiving their income. These individuals include freelancers and contractors that work for people and organizations. These types of people collect their entire income without any deduction. Some of these income types include:
- Rent;
- Dividends;
- Interest;
- Unemployment allowance;
- Social security advantages.
These income types and many more are paid to the owner without any tax deductions. As such, it is the responsibility of the income owner to calculate and pay their tax. This form of tax is paid using the 1040-ES form.
1040-EStimated Payments
A person can estimate the tax they need to pay using an estimated tax voucher. This calculation is done using the income estate per year. Also, some prefer to use a 1040-ES calculator for this work. There is always a real possibility of underestimation and underpayment of actual taxes in either case. Therefore, a person must be careful when completing their form 1040-ES. It is always good to use 1040-ES 2020 (previous year) when filling a form 1040-ES 2021. Doing this helps people file their taxes correctly and avoid being penalized. However, an individual that refuses to offset their taxes risks paying the penalty. Therefore, freelancers and contractors can risk overpaying tax as they can always get a tax refund.
Calculation with IRS Estimated Tax Payment Form
Armed with previous IRS form 1040-ES, a person can determine the taxes they need to pay. A person should analyze deductions, taxable incomes, credits, and tax paid. Doing this makes the tax payment process easier for an individual as they get to compare current and previous incomes. Once the calculation is completed, a payer can decide to pay 1040-ES online or via the 1040-ES mailing address (cheque).
1040-ES 2021 Eligibility
Not all self-employed people are eligible to make an IRS 1040-ES payment. Those without the previous year’s tax liability do not have to pay tax. However, all other persons must make payments. They are also encouraged to search for 1040-ES instructions via the internet.
How to Fill Out 1040-ES
A freelancer needs their form 2020 1040-ES to determine the current 1040-EStimated payments. Also, a person must provide some personal details, which include;
- Legal name;
- Full address.
Likewise, the payer must submit the previous 1040-EStimated tax forms slip when making each submission. Since payments are due quarterly, all the 2021 1040-ES tax forms slips must be attached to the first 2022 payment.
1040-ES Due Dates
Unlike other tax payments, the 1040-ES is due in the middle of some months of each quarter. Therefore, a person is expected to file their tax form on the 15th of April, June, September, and January, respectively. This deadline shifts to the next working day if it is a weekend. Similarly, payers can make daily, weekly, or monthly payments as long as they do not exceed the deadline.
Please check other IRS forms: