What is Form 1040-ES?
Form 1040-ES, Estimated Tax for Individuals, is a form used to figure and pay for your estimated tax.
Estimated tax is the method used to pay tax on income that isn’t subject to withholding, such as earnings from self-employment, interest, dividends, rents, and alimony. In addition, if a person does not choose voluntary withholding, they should make estimated tax payments on other taxable income such as unemployment compensation and the taxable portion of their social security benefits.
While most people do need to pay estimated tax, meeting certain requirements will allow a person to be exempt from having to pay estimated tax. An employee may ask their employer to withhold more tax from their salary in order to avoid having to pay the estimated tax. To do this, they must file a new Form W-4, Employee’s Withholding Certificate, with their employer, and enter the additional amount to be withheld from their salary.
A person is also exempt from having to pay estimated tax for the current tax year if the following three requirements are met:
- They had no tax liability for the prior year.
- They were a U.S. citizen or resident for the whole year.
- Their prior tax year covered a 12 month period.
There are also special rules that apply in the case of particular professions and employers. Consult the “Special Rules” section of Page 1 of the form for more details.
Who needs to use Form 1040-ES?
People usually must fill out Form 1040-ES if they meet the following conditions:
- They expect to owe at least $1000 in tax for 2021, after subtracting their withholding and refundable credits.
- They expect their withholding and refundable credits to be less than the smaller of:
a. 90% of the tax shown on your 2021 tax return.
b. 100% of the tax shown on your 2020 tax return, which must cover all 12 months of that year.
These rules apply to US citizens and resident aliens, residents of Puerto Rico, the US Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI) and American Samoa, and non-resident aliens (though they must use Form 1040-ES (NR)).
How to fill out Form 1040-ES?
Form 1040-ES is a very simple form to fill out. Make sure to have the relevant documents with you as you fill out the form in order to make the process easier and to ensure that the information you enter is updated and correct.
There are also instructions and extra details provided throughout the form itself. Make sure to consult these instructions if you need extra details or clarification on any part of the form.
Self-Employment Tax and Deduction Worksheet for Lines 1 and 9 of the Estimated Tax Worksheet
Enter your expected income and profits subject to the self-employment tax.
If you have farm income and also receive social security retirement or disability benefits, enter your expected Conservation Reserve Program (CRP) payments that will be included in Form 1040 (Schedule F) or listed in Form 1065 (Schedule K-1).
Subtract Line 1b from Line 1a and enter the difference.
Multiply Line 2 by 92.35% (0.9235) and enter the product here.
Multiply Line 3 by 2.9% (0.029) and enter the product here.
This is the maximum taxable income by social security tax for the year 2021.
Enter your expected wages here, if they are subject to social security tax or the 6.2% portion of the tier 1 railroad recruitment tax.
Subtract Line 6 from Line 5, and enter the difference.
If the difference is zero or less, enter -0- on Line 9 and skip to Line 10.
Enter the smaller of Line 3 or Line 7.
Multiply Line 8 by 12.4% (0.124) and enter the product here.
Add Line 4 and Line 9. Enter the sum here and on Line 9 of the 2021 Estimated Tax Worksheet on Page 8 of the form.
Multiply Line 10 by 50% (0.5) and enter the product here.
Subtract this amount when figuring your expected Adjusted Gross Income (AGI) on Line 1 of your 2021 Estimated Tax Worksheet.
2021 Estimated Tax Worksheet
Enter your expected AGI in 2021. If you are self-employed, remember to take into account the deduction for self-employment tax.
Enter your standard deductions here. If you plan to itemize your deductions, enter the estimated total of your itemized deductions instead.
If you are able to take the qualified business income deduction, enter the estimated amount of the deduction here.
Add Line 2a and 2b and enter the sum here.
Subtract Line 2c from Line 1 and enter the difference here.
Figure your tax on the amount on Line 3 by consulting the 2021 Tax Rate Schedules on Page 7 of the form. Enter the amount of tax here.
Enter the alternative minimum tax from Form 6251, Alternative Minimum Tax - Individuals, here.
Add lines 4 and 5. Add this to the amount of any other taxes you expect to include in the total on Form 1040, Line 16.
Enter your credits here. Do not include any income tax withholding on this line.
Subtract Line 7 from Line 6 and enter the difference here. If the difference is zero or less, enter -0-.
Enter your self-employment tax as entered in Line 10 of the Self-Employment Tax and Deduction Worksheet.
Enter any other taxes here.
Add Line 8, 9, and 10 and enter the sum here.
Enter your earned income credit, additional child tax credit, fuel tax credit, net premium tax credit, refundable American opportunity credit, and refundable credit from Form 8885 (Health Coverage Tax credit), if applicable.
Subtract Line 11b from Line 11a and enter the difference here. If the difference is zero or less, enter -0-.
Multiply Line 11c by 90% (0.9), or 66?% (0.667) for farmers and fishermen and enter the product here.
Enter the required annual payment based on the prior year’s tax.
Enter the smaller of Line 12a or 12b.
Enter the income tax withheld and estimated to be withheld during 2021.
Subtract Line 13 from Line 12c and enter the difference here. If the result is zero or less, check “yes” and stop here - you are not required to make estimated tax payments.
Otherwise, check “no” and proceed to line 14b.
Subtract Line 13 from Line 11c and enter the difference here. If the result is zero or less, check “yes” and stop here - you are not required to make estimated tax payments.
Otherwise, check “no” and proceed to Line 15 to figure your required payment.
If the first payment you are required to make is due April 15, 2021, enter ¼ (25%) of the amount on Line 14a, minus any 2020 overpayment you are applying to this installment, here and on your estimated tax payment voucher(s) if you are paying by check or money order.
Record of Estimated Tax Payments
Column A - Amount Due
Enter the amount of tax due by the corresponding deadline in this column.
Column B - Date Paid
Enter the dates that these tax payments were paid in this column.
Column C - Check or Money Order Number, or Credit Card or Debit Card Confirmation Number
Enter the number of the payment method you used to make each of the tax payments.
Column D - Amount Paid
Enter the amount paid. Do not include any convenience fees associated with payment.
Column E - 2020 Overpayment Credit Applied
Enter how much overpayment credit from 2020 was applied.
Column F - Total Amount Paid and Credited
Enter the total amount paid and credited here (sum of the corresponding row of Column D and E).
Enter the totals of Column D, E, and F in the given spaces.
2021 Estimated Tax Payment Voucher
You need only fill this out if you are making a payment of estimated tax via check or money order.
Amount of Estimated Tax being paid
Enter the amount of estimated tax you are paying for by check or money order in dollars and cents.
Enter your first name and middle initial and your last name in the space provided.
Social Security Number
Enter your social security number here.
Enter your spouse’s first name and middle initial and last name in the space provided.
Spouse’s Social Security Number
Enter your spouse’s social security number here.
Enter your full home address’ number, street, and apartment number.
City, Town, or Post Office
Enter your City, Town, and Post office here.
Enter the State you live in here.
Enter your ZIP code here.
Foreign Country Name
Only fill this out if you have a foreign address. Enter the name of the foreign country here.
Only fill this out if you have a foreign address. Enter the name of the foreign province or city you live in.
Foreign Postal Code
Only fill this out if you have a foreign address. Enter your foreign postal code here.
Make sure to enclose the payment voucher and check or money order alongside this form and your individual tax returns as you submit them. Make sure to fill out as many payment vouchers as you have payments to make, if you are using a check or money order.
Tips when filling out Form 1040-ES
Form 1040-ES requires that you have information from forms such as 1040 in order to ensure that the information you are entering about your estimated tax is correct. Because the form also contains sensitive information such as your social security number and tax details, it is important that you keep this form safe.
Ensure that all information is updated and correct. This will help to avoid issues surrounding proper taxation and the legal consequences thereof. Make sure to double-check if you’ve entered everything correctly.
Practice good contract management. Create a copy of the fulfilled Form 1040-ES and keep it in a secure, organized area. This will be useful for backup or possible future legal uses.