Estimating Tax Payments for 2012 Taxes

If you currently have income that is not subject to tax withholding, you are inevitably dealing with estimated tax payments. A very common example of those dealing with estimated tax payments are church pastors. Pastors taxes often involve estimated payments and it is imperative that these be submitted accurately and in a timely manner to ensure that you’re not underpaying taxes and therefore avoiding penalties for underpayment.

Tips for Estimating Tax Payments for 2012 Taxes 

Determine your expected adjusted gross income by taking last year’s income and adjusting based off of any changes you experienced during the current year.

Subtract estimated deductions and exemptions to acquire your expected taxable income. You can calculate your expected taxable income by using current tax tables and schedules.

Subtract expected credits and add any additional expected taxes, the most common are self-employment social security taxes unless you have qualified for a tax exemption as a pastor.

Subtract your expected tax withholding and what is left is what should be paid in estimated tax payments.

Another method for estimating tax payments involves multiplying the total tax shown on last year’s return by 90 percent. Determine the smallest of 100 percent of your taxes for the tax year before last or 90 percent of your last tax year. Then subtract your expected withholdings and what is left should be paid in estimated tax payments.

Submitting Estimated Tax Payments

Obtain a Form 1040-ES and the four payment vouchers associated with the form. You will be making four equal payments so divide your total estimated tax payment for the year by 4. Deadlines for each payment are April 15, June 15, September 15, and January 15. Always remember to put your social security number on the 1040-ES vouchers and make checks payable to the United States Treasury.

You may also consider paying online using the EFTPS website, or Electronic Federal Tax Payment system (EFTPS.gov). Once logging into the website click on the enrollment tab and follow the prompts in order to enter your information correctly. You will then receive a PIN in the mail and request a password. Once you have done this you can simply login and make payments from the website.

Income tax for ministers is quite complicated as is the process for estimating tax payments, therefore reviewing options and methods with a tax professional is always advised.

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Sarah Wozniak

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