estimated tax

Thân thiện

A small business owner calculates their estimated tax for the quarter.

Definition

Noun: 1. A periodic payment of income tax: This is a tax payment made to the government (e.g., the IRS in the United States) on income that is not subject to regular withholding. It is calculated based on the taxpayer's projected total tax liability for the year.

Usage

The term "estimated tax" is used to describe the system and the payments themselves. It is typically used in the context of self-employment, investment income, or other situations where taxes are not automatically withheld from earnings. * Freelancers and independent contractors often need to pay estimated tax quarterly. * He made his first estimated tax payment for the year in April. * Failure to pay enough estimated tax can result in a penalty.

Advanced Usage

• "To file estimated taxes": This phrase refers to the process of calculating and submitting the required periodic payments and the associated declaration form (e.g., IRS Form 1040-ES in the U.S.).
  • As a small business owner, she must file estimated taxes four times a year.

Variants and Related Words

• Estimated Tax Payment (n): A single installment of the total estimated tax for the year. This is a compound term where "estimated" modifies "tax payment."
  • The deadline for the third-quarter estimated tax payment is September 15th.
• Quarterly Estimated Tax (n): A common compound term specifying the frequency of the payments.
  • He set aside money each month for his quarterly estimated tax.

Synonyms

• Projected tax payment: A less common synonym emphasizing the calculation is based on a forecast.
• Advance tax payment (used in some tax systems): Highlights that the payment is made in advance of the annual tax return filing.

Related Phrases

• Underpayment of estimated tax: This phrase describes the situation where the total estimated tax payments for the year are less than the required amount.
  • He received a notice about an underpayment of estimated tax for the previous year.
• Safe harbor for estimated tax: A tax rule that specifies conditions (like paying 100% of the previous year's tax liability) under which a taxpayer will not be penalized for underpayment, even if the current year's final tax is higher.
  • Meeting the safe harbor for estimated tax requirements helps avoid penalties.

Học thuật

Noun

1. income tax paid periodically on income that is not subject to withholding taxes; based on the taxpayer's predicted tax liability