This chapter explains the use of Form 1040-ES to
figure and pay estimated tax.
Estimated tax is the method used to pay tax on income that is not
subject to withholding. This includes income from self-employment,
interest, dividends, alimony, rent, gains from the sale of assets,
prizes, and awards. You also may have to pay estimated tax if the
amount of income tax being withheld from your salary, pension, or
other income is not enough.
Estimated tax is used to pay both income tax and self-employment
tax, as well as other taxes and amounts reported on your tax return.
If you do not pay enough through withholding or by making estimated
tax payments, you may be charged a penalty. If you do not pay enough
by the due date of each payment period (see When To Pay Estimated
Tax, later), you may be charged a penalty even if you are due a
refund when you file your tax return. For information on when the
penalty applies, see chapter 4.
It would be helpful for you to keep a copy of your 2000 tax return
and an estimate of your 2001 income nearby while reading this chapter.
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