California Estimated Tax Payments

As a small business owner, freelancer, or self-employed individual in California, you may be required to pay quarterly estimated tax payments. These payments are designed to help you avoid a substantial underpayment of taxes at the end of the year. There are several important rules and regulations that you must follow to ensure that your estimated tax payments are made correctly and on time. California estimated tax payments are required for anyone who expects to owe more than $500 in income taxes at the end of the year. This includes individuals, W-2 wage earners who don’t have enough withholding from their paychecks, self-employed individuals, and those who receive investment income such as interest, dividends, and capital gains.

Using the online services provided by the FTB is an easy way to pay your estimated tax. However, you can go to a local field office if you prefer to pay in person. Just remember to call ahead to schedule an appointment. It’s also important to note that you can’t use cash at a field office. You must pay with a check, money order, or credit card. If you don’t have the funds, contact a tax professional to discuss options for a payment plan or penalty relief.

How to Calculate California Estimated Tax Payments?

The first step in calculating your estimated tax payment is to determine how much you expect to owe this year. You can do this by adding your expected income, deductions, and tax credits together. Then, subtract your federal income tax withholding and any other estimated tax payments you’ve already made.

Once you’ve determined how much you owe, you can calculate your estimated tax payments using Form 540-ES. This form includes a California Estimated Tax Worksheet, which can help you more accurately determine how much you should be paying each quarter. The due dates for the estimated tax payments are spread throughout the year, with each quarter having a different percentage amount that needs to be paid. In addition, each payment uses a different Form 540-ES, so it’s crucial to know which one to use. Also, make sure that you’re entering the correct date in each payment field.

California Pass-Through Entity Tax Participants

If you elect to participate in the California pass-through entity tax (PTET) for 2022, you must make the requisite minimum estimated tax payment(s) by June 15. Failure to do so may preclude the entity from participating in the PTET for the current taxable year and future taxable years.

Small business owners and freelancers need to pay attention to quarterly estimated tax deadlines. There are penalties for missing these payments, so it’s important to adhere to the guidelines set by both the IRS and the Franchise Tax Board. This is especially true for those who work in the gig economy. The good news is several online resources are available to help you calculate and submit your estimated taxes on time.