<topic sku="core" tNum="288316" author="sallyh" xmlns="x-schema:hhTopicSchema.xml"><index><title>Learn about estimated tax payments</title><category>tax</category><klink type="cncpt">Tell me about estimated tax payments</klink></index>
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<p>The federal income tax is a pay-as-you-go tax<mdash/>you must pay sufficient tax as you earn or receive income during the year or be subject to possible interest and penalties on the underpayment of tax. You can pay your tax throughout the year in one or both of these two ways:</p>
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<tease>Income tax withholding</tease>
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<p>If you earn wages or a salary, you probably have income taxes withheld from your paychecks throughout the year. You give your employer a Form W-4 that tells them how to calculate your withholding based on your number of personal allowances, filing status, and additional withholding. You can also have tax withheld from other income, such as unemployment income.</p>
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<tease>Estimated tax payments</tease>
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<p>If you don't have income tax withheld, or if you have additional income not subject to withholding, you might have to pay estimated tax. If you are in business for yourself, you generally pay tax this way. You may also have to pay estimated tax on dividends, interest, capital gains, rents, and royalties or other income. Your estimated tax payments should cover not only income tax, but any self-employment tax and alternative minimum tax you owe as well. For more information and the exceptions to penalties for underpayment of tax, see IRS Publication 505, Tax Withholding and Estimated Tax, on the <alink type="xtnl" href="http://www.irs.gov">IRS Web site</alink>.</p>
