How to File Form 1040-ES for 2024 Estimated Tax
Learn the process for managing your 2024 tax liability on income not subject to withholding. This guide covers calculating and submitting estimated tax with Form 1040-ES.
Form 1040-ES, Estimated Tax for Individuals, is used for paying taxes on income that is not subject to withholding. The U.S. tax system operates on a pay-as-you-go basis, so taxes must be paid as income is earned throughout the year. While employer withholding from paychecks handles this for many people, those with other income sources are responsible for paying these taxes themselves. This includes income from self-employment, investments, or other work without withholding.
Determining if You Need to Pay Estimated Taxes
If you expect to owe at least $1,000 in tax for 2024 after subtracting your withholding and refundable credits, you are required to make estimated tax payments. This threshold applies to individuals, including sole proprietors, partners, and S corporation shareholders.
To avoid an underpayment penalty, you must meet certain “safe harbor” rules. Your total tax payments during the year through withholding and estimated payments must equal at least 90% of your 2024 tax liability. Alternatively, you can avoid a penalty by paying at least 100% of the tax shown on your 2023 return. For taxpayers with an adjusted gross income (AGI) over $150,000 ($75,000 if married filing separately) in the prior year, this increases to 110% of the prior year’s tax.
This payment obligation is common for individuals with income from sources such as:
- Self-employment, freelance work, or the gig economy
- Interest, dividends, and capital gains
- Rental income
- Prizes and awards
- Unemployment compensation
- The taxable portion of Social Security benefits
Calculating Your 2024 Estimated Tax Payments
To calculate your payments, use the Estimated Tax Worksheet included in the Form 1040-ES package. You will need to estimate your adjusted gross income (AGI), anticipated deductions (whether you plan to take the standard deduction or itemize), and any tax credits you expect to claim for the 2024 tax year. Your prior year’s tax return can serve as a useful guide for these figures.
The worksheet walks you through the calculation. You will estimate your total income, subtract your expected deductions to find your estimated taxable income, and then apply the 2024 tax rates. After calculating the initial tax, you subtract any eligible tax credits. The worksheet also helps account for other obligations, like self-employment tax.
After finding your total expected tax, the worksheet helps determine the required annual payment to avoid a penalty. This total amount is then divided by four to establish your quarterly payment amount. You will use this figure to fill out the payment vouchers included in the Form 1040-ES package.
If your income is not steady, the annualized income installment method is an alternative. This method allows you to adjust your payment for each period based on the income earned during that time. This can prevent large payments during periods of low income but requires more detailed record-keeping and recalculation for each payment deadline.
Payment Deadlines and Submission Methods
The tax year is divided into four payment periods, each with a specific due date. If a due date falls on a weekend or holiday, the payment is due the next business day. For the 2024 tax year, the deadlines are:
- For income earned Jan. 1 – Mar. 31: April 15, 2024
- For income earned Apr. 1 – May 31: June 17, 2024
- For income earned Jun. 1 – Aug. 31: September 16, 2024
- For income earned Sep. 1 – Dec. 31: January 15, 2025
To pay by mail, write your Social Security number and “2024 Form 1040-ES” on your check or money order. Make it payable to the “United States Treasury” and mail it with the correct payment voucher to the address in the form’s instructions.
The IRS also offers several electronic payment options:
- IRS Direct Pay allows you to pay directly from a checking or savings account at no cost.
- The Electronic Federal Tax Payment System (EFTPS) is a free online service to schedule payments in advance.
- Your IRS Online Account provides access to payment history and other tax records.
- Third-party processors allow you to pay by phone or online with a card, though they may charge a fee.
Consequences of Underpayment or Late Payment
Failing to pay enough tax on time through withholding or estimated payments can lead to a penalty. The penalty is an interest charge on the amount you underpaid for the period it was late. It is calculated for each payment period, so you can owe a penalty for an early quarter even if you overpay later in the year.
The IRS usually calculates this penalty and will send you a bill. You can also calculate it yourself using Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. Filing Form 2210 is required if you request a penalty waiver or use the annualized income installment method.
The IRS may waive the penalty in certain situations. A waiver can be granted for a casualty, disaster, or other unusual circumstance. The penalty may also be waived if you retired after age 62 or became disabled during the tax year, as long as the underpayment was due to reasonable cause and not willful neglect.