Estimated Tax Services

Estimated Tax Services

There are two situations in which a worker can receive both Forms W-2 and 1099. The first is if the worker had 2 separate concurrent responsibilities with the employer and thereby performed separate duties, one as an employee and one as an independent contractor. Basically this means the worker had a job as an independent contractor and another job as an employee for the same company at the same time. The second situation is where the worker held these two separate jobs at separate times during the same tax year for the same employer.

How to Pay Estimated Tax

If you are filing as a partner, sole proprietor, S corporation shareholder and/or a self-employed individual, you should use IRS Form 1040-ES, Estimated Tax for Individuals, to calculate and pay your estimated income tax. For your business, if you are filing as a corporation you should use Form 1120-W, Estimated Tax for Corporations, to calculate the estimated tax and you will need to deposit the payments as required by the IRS.

Who Must Pay Estimated Tax

If you are filing as a partner, sole proprietor, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of at least $1,000 or more when you file your annual tax return. For a corporation, you generally have to make estimated tax payments if you expect it to owe tax of $500 or more when you file the annual corporate return. Also if you had a tax liability for the prior tax year, you may have to pay estimated tax for the current year.

Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings using a W-4 Form. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.