When you pay income tax in quarterly installments, you use IRS Form 1040-ES to report how much money you’re sending to the government. It doesn’t replace Form 1040—it works alongside it, the peanut butter to Form 1040’s jelly.
While Form 1040 reports your income tax for the year, Form 1040-ES breaks it into quarterly installments. That way, the government can keep track of how much quarterly income tax you’ve paid over the course of the year. And so can you.
We’ll briefly touch on what you need to know about estimated taxes, then walk through the process of filing Form 1040-ES.
What are estimated taxes?
Any sole proprietorship, LLC, S corporation, or partnership that expects to pay over $1,000 in income tax for the year is required to pay that amount in four parts, evenly distributed over the course of the year. For C corporations, that limit is $500.
Form 1040-ES is broken into four separate slips, one for each payment period. Every time you send a payment to the IRS, you have to submit one of those slips.
But what if you’re not sure what your tax liability will be for the current year? What if you estimate an amount that’s too high, or too low? All valid questions. If you’re not familiar yet with the ins and outs of estimated taxes, check out our guide on how to calculate and pay them. Then come back here—you’ll have all the info you need to start filling out Form 1040-ES.
How to fill out Form 1040-ES
Filling out Form 1040-ES may be the simplest part of filing quarterly estimated taxes for your business.
All you need to include is your personal info and the amount of the quarterly payment. Each of the form’s four slips even has its deadline printed on it.
The slips are labeled one through four. That lets you keep track of what order they need to be filed in:
These slips are for the 2019 tax year. They’re submitted alongside your quarterly payments over the course of the year. Note that you only need to fill in your spouse’s info if you’re filing jointly.
The instructions for Form 1040-ES also include this handy little table for your records:
Keep it on hand and up-to-date, so you can track which payments you’ve made, how you paid them, and when all four payments for the year are due.
How to fill out the Form 1040-ES worksheet
Here’s what the Form 1040-ES worksheet looks like:
So long as you have all your financial info for the previous year—ideally provided by a professional bookkeeper—you should be good to go. Using our guide to estimated quarterly taxes, plus the Form 1040-ES worksheet, you can estimate your tax payments for the year.
A couple of spots to take note of:
Line 2a is where you enter deductions. If you’re planning to itemize deductions, you may want to base your estimate on last year’s total amount. Otherwise, you can use your standard deduction here.
Line 4 is where you’ll enter your estimated taxes for the year, before deductions or credits. You’ll figure these out by referencing the 2019 tax rate schedules (covered below).
Line 9 is where you enter your self-employment tax, which is usually 15.3% of your gross income.
Line 14 (a and b) is where you enter your total tax for the year, taking into account deductions and credits. If this is your first year filing estimated quarterly taxes, Depending what you calculate for this line, you may or may not be required to pay quarterly estimated taxes this year.
Line 15 gives you your quarterly payment amount. This is just the amount on Line 14, multiplied by 0.25.
Form 1040-ES and the 2019 tax rate schedule
The tax schedule included in the instructions for Form 1040-ES lets you know how much income tax you should estimate for the year, based on what you’ve estimated for income:
You’ll refer to this schedule when you fill out Line 4 of the Form 1040-ES Estimated Tax Worksheet.
Once you’ve used our guide to estimated quarterly taxes to estimate your income for the year, you can look at the tax schedule and find your income bracket.
Each income bracket comes with a flat amount you need to pay for that bracket, plus a percentage of whatever income you’ve earned that’s over the bracket’s minimum.
Calculating your tax liability for Form 1040-ES
Here’s a quick example of how you might calculate your estimated quarterly payments in order to fill out Form 1040-ES.
Say you’ve estimated you’ll earn $50,000 this year. That puts you in the “$39,475 to $84,200” tax bracket, according to the tax schedule.
Right away you can tell, by looking at the schedule, that you’ll have to pay at least $4,534 in taxes. In addition to that, you have to pay 22% of whatever you earned above $39,475 (the bracket minimum.)
So you can calculate your estimated tax liability like this:
Flat Rate + ((Gross Income – Tax Bracket Minimum) x Tax Rate on Bracketed Income)
4,534 + ((50,000 – 39,475) x 0.22) = $6,849.50
So, your total income tax for the year is $6,849.50, before deductions. You’d enter that on Line 4 of the worksheet.
Let’s add a deduction. For the sake of simplicity, assume you’re taking the standard individual tax deduction of $12,200. That means your adjusted income is $50,000, minus $12,200.
$50,000 – 12,200 = $37,780
Your adjusted income of $37,780 puts you in a lower tax bracket. You’re now in the “$9,700 to $39,475” range. According to the tax schedule, your flat tax is $970, plus 12% of everything over $9,700.
So we recalculate your tax obligation:
970 + ((37,780 – 9,700) x 0.12) = $4,339.60
Now, after taking the standard deduction, $4,339.60 is the total you’re expected to pay—your net total.
To fill out Line 15, we divide your net total estimated income tax for the year by four. So:
$4,339.60 x 0.25 = $1,084.90
Each estimated tax payment you make this year will be $1,084.90. And that’s the amount you’ll enter on slips one through four of Form 1040-ES.
Schedules, forms and records, oh my. Keep on top of everything you need to file your taxes this year our 2019 U.S. Small Business Checklist.