US Estimated tax payment due – Could this affect you?
For those of you who are not aware, US estimated tax payments are used to pay US tax on income that is not subject to US tax withholding. If you do not pay enough through withholding you may be subject to a penalty.
Some of you have been doing this throughout the year, and this blog will serve as a reminder for the last payment due next week. However, if you have not yet done this during 2012, and need to, below are instructions on how you can figure it out based on your 2011 tax return:
Look at two lines on page 2 of your 2011 US tax return – Form 1040:
· Total tax (line 61)
· Tax withholding (line 62)
Subtract the two amounts (‘total tax’ less ‘tax withholding’) and the result is your unfunded tax liability. These payments are meant to be made by the four dates below:
· April 15th
· June 15th
· September 15th
· January 15th
Payment should be mailed to the IRS Service Center using Form 1040ES and checks from a US bank account should be made payable to “United States Treasury.” Be sure to put your social security number and tax year for which you are making the payment on the memo area of your check. Also, ensure you keep a copy of the form filed and obtain a “certificate of mailing” available free of charge from your post office as this will be accepted as proof of mailing by the IRS should your payment go astray.
Three of the four payment dates above have now passed, and the next and final payment for your 2012 estimated taxes is due next week, January 15th. If you think you should have made these payments in 2012 for your 2012 taxes and you have not, please get in touch.
You will use this same method to estimate your 2013 taxes based on your 2012 tax return.
If you do not file your 2012 tax return until the extended June 15th filing deadline (automatically applied to Americans living abroad), and thus cannot use your 2012 tax return as a basis to calculate your first 2013 estimated payment, then you will need to calculate your tax liability for the 2013 calendar year to the best of your ability. You may choose to use your 2011 tax return as a guide if your financial situation is similar.
You do not have to pay estimated tax if:
· You had no tax liability for the prior year (2011)
· You were a US citizen or resident for the whole year
· Your prior tax year covered a 12-month period
Contact us if you would like further advice on this.