Monday, March 24, 2008

Estimated Taxes and the IRS

Estimated taxes the method used to pay, on income that is not subject to withholding. This incudes income from self-employment, interest, dividends, alimony, rent, gaines from the sale of assets, prizes, and awards. You also may have to pay the estimated tax if the amount of income tax being withheld from your salary, pension or the other income is not enough.
Estimated tax is used to pay both income tax and self-employment, income tax and self-employment as well as other taxes and amount reported on your tax return. If you do not pay enough through withholding or estimated payments, you may be charged a tax penalty. If you do not pay enough by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your tax return.

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