When you earn income that does not have taxes withheld by an employer, you still have to pay taxes on it -- in Pennsylvania, you may have to make as many as four payments per year. These are called estimated payments, and you only have to make them if you estimate that your untaxed income will be above a certain amount. If you don't pay these estimated taxes, you could face a penalty.
What They Are
In Pennsylvanua, if you expect to make more than $8,000 of non-taxed income, you must make quarterly tax payments. Each of these payments comprises one-fourth of your annual tax on the estimated earnings. To determine the amount of your payments, multiply the amount you expect to earn by the income tax rate, then divide that number by four.
Your estimated tax payments are due on April 15, June 15, Sept. 15 and Jan 15., unless one of the due dates falls on a federal holiday or weekend -- in that case, the payment is due on the next business day. You may make your payments electronically or by mail, and if you wish, you can pay your entire estimated annual amount in one payment, saving yourself the trouble of remembering to make quarterly payments.
If you start a new business venture partway through the year, or learn that you are coming into unexpected money, you do not have to make back-payments for past due dates. For example, if you start a personal business on June 16, you do not have to make payments for April or June. Instead, estimate your taxable income for the rest of the year and divide that by the two remaining payments, then make your payments in September and January.
Do not worry about accidentally or unknowingly paying too little in estimated income tax -- you are not penalized for being slightly off the mark. If you pay as much as 90 percent as what you owe through your estimated payments, you are not penalized for underpayment. You may also base your payments off your payments from the previous year, albeit adjusted to reflect the current income tax rate.
- Easy Estimated Taxes: Pennsylvania Estimated Taxes
- Pennsylvania Dept. of Revenue: Estimated Tax Payments for Personal Income Tax
- Social Security Administration. "Benefits Planner: Income Taxes And Your Social Security Benefit." Accessed Jan. 17, 2020.
- Internal Revenue Service. "Publication 505 (2019), Tax Withholding and Estimated Tax." Accessed Jan. 14, 2020.
- Internal Revenue Service. "Publication 509 (2020), Tax Calendars." Accessed Jan. 14, 2020.
- Internal Revenue Service. "When to Pay Estimated Tax." Accessed Jan. 14, 2020.
- IRS. "Filing and Payment Deadlines Questions and Answers." Accessed March 26, 2020.
- Internal Revenue Service. "The Basics of Estimated Taxes for Individuals." Accessed Jan. 14, 2020.
- Internal Revenue Service. "The Basics of Estimated Taxes for Individuals." Accessed Jan. 17, 2020.
- Internal Revenue Service. "Topic No. 554 Self-Employment Tax." Accessed Jan. 14, 2020.
- Internal Revenue Service. "Questions and Answers on the Net Investment Income Tax." Accessed Jan. 14, 2020.
- Internal Revenue Service. "Estimated Taxes." Accessed Jan. 14, 2020.
- Internal Revenue Service. "Large Gains, Lump Sum Distributions, etc." Accessed Jan. 14, 2020.
Tom Ryan is a freelance writer, editor and English tutor. He graduated from the University of Pittsburgh with a degree in English writing, and has also worked as an arts and entertainment reporter with "The Pitt News" and a public relations and advertising copywriter with the Carnegie Library of Pittsburgh.