You are required to make estimated tax payments, whether through Form 1040 ES, or through salary withholdings in the amount of 100%, or 110% of what your tax liability was the year before to avoid paying a penalty. You should look at your Form 1040 for 2014, and see what your tax liability was on page 2 of the form. Look at your withholding from your last pay stub, and see if you are on track to withhold at least 100% of what your tax liability was in 2014. If you were not, then you should make an estimated tax payment.
Craig W. Smalley, E.A.
Admitted to practice before the Internal Revenue Service
If you had tax liability in the previous year and you are self employed, and not a W2 wage earner, then you are required to make ES Tax payments on a quarterly basis, equal to the amount owed from the previos years return. However, if you file your return and full pay the liability by Jan 31st, you will not have a requirement for ES tax deposits and will not be assessed penalties for failure to deposit, late deposit, stc.
First, no one is required by law to file estimate tax payments. The people who do file estimated tax payments are those who do not have withholding from other sources or carryovers from prior years and are intended to avoid penalties and interest that may be charged by the IRS. A good example is somebody who has a salary of $70,000 and has enough withholding to cover the taxes on that $70,000 of earned income. Let's assume they have another $70,000 of dividends and interest. No one withholds taxes on dividends and interest and the IRS suggests that you do a calculation to determine how much taxes you will owe at the end of the year. If you're going to be short of the taxes owed, then it is recommended that you make estimated tax payments to avoid interest and penalties. One of the ways to avoid any penalties is to be sure that you paid at least as much in withholding and estimated taxes as in the prior year. Although there are many other nuances to the subject I think this should give you an idea of who should pay estimated taxes and why. Good luck
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