If you don’t pay enough tax through withholding and estimated tax payments, you may be charged a penalty. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax.
If you are in business for yourself, you generally need to make estimated tax payments. If the amount of income tax withheld from your salary or pension is not enough, or if you receive income such as interest, dividends, alimony, self-employment income, capital gains, prizes and awards, you may have to make estimated tax payments. Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. For recent developments, see the tax year 2022 Publication 505, Tax Withholding and Estimated Tax.
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