Paying Estimated Taxes?

[Play Care]

The last couple of years we've had to pay Federal but got a little back from State. My IL's who owned their own business for many years say we should be paying estimated taxes or we could face penalties.

Our accountant hasn't said anything about it. DH is the type to not want to give the Government a "free" loan, so he's fine with paying a little bit each year rather than getting thousands back.

But we don't want to risk additional penalties. How do you know if you should be paying estimated taxes?

[TomCopeland]

estimated taxes

The last couple of years we've had to pay Federal but got a little back from State. My IL's who owned their own business for many years say we should be paying estimated taxes or we could face penalties.

Our accountant hasn't said anything about it. DH is the type to not want to give the Government a "free" loan, so he's fine with paying a little bit each year rather than getting thousands back.

But we don't want to risk additional penalties. How do you know if you should be paying estimated taxes?

You need to pay estimated taxes if you owe more than 10% of your taxes at the end of the year. If this is true there is a penalty. So, if you owe less than 10% of your taxes at the end of the year you don't need to file estimated taxes.