Form 1040-ES (2021)

What Is Form 1040 ES 2021?

Form 1040-ES, also known as the Estimated Tax for Individuals, is a form taxpayers use to pay estimated taxes to the IRS on income that is not subject to withholding. This could include income from self-employment, dividends, rent, or other sources. The form helps you calculate and pay estimated taxes every quarter to avoid underpayment penalties.

Importance of estimated tax payments

The 2021 Form 1040 ES is an important document for anyone who earns income that does not have taxes automatically withheld. This may apply to self-employed individuals, investors, or those with significant income from sources like rental properties. The Internal Revenue Service (IRS) requires that taxes on income be paid as you earn or receive it throughout the year, and estimated taxes serve to meet this requirement.

How to Fill Out 1040 ES Form 2021

Filling out the 2021 IRS 1040 ES form accurately is vital to prevent underpaying or overpaying. Properly completed, this form can help to distribute your tax payments evenly throughout the year and avoid a large tax bill when filing your annual return:

1. Begin by providing your name and Social Security Number (SSN) in the appropriate fields at the top of the form.
2. If you have a joint filing, include your spouse's name and SSN in the designated areas next to your information.
3. Enter your address details, including street, city, state, and zip code in the respective fields following your name and SSN.
4. Move to the estimated tax worksheet associated with the 1040-ES form, starting with your expected adjusted gross income for the year 2021, and record this in the first line of the worksheet.
5. Subsequently input your deductions, detailing each figure where required, to calculate the taxable income estimate, which you will document later in the worksheet.
6. Calculate your estimated total tax liability for 2021, including income tax, self-employment tax, and any other taxes, and transcribe this sum into the corresponding line.
7. If you expect credits, such as the child tax credit or the earned income credit, subtract these from your estimated tax liability and record the result.
8. Determine the smaller of 90% of your current year's expected tax liability or 100% of your prior year's tax liability, and note this on the appropriate line to establish your required annual payment to avoid penalties.
9. Enter the total of any estimated federal income tax payments you've already made for the tax year, including any overpayments from the previous year that you've applied to this year's taxes.
10. Subtract the total payments made from your required annual payment calculated earlier to ascertain the balance due or the refund expected.
11. Decide how you would like to pay or receive payments, whether it's through check, money order, or direct debit or deposit, and provide your bank routing and account numbers if necessary in the designated areas.

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