What is a 1040-ES Form Irs ?
Q.I received a 1040-ES in the mail today. I am not sure why I am receiving this. Is this a manditory form Irs ? Is it telling me that I made a mistake from last year? I guess I am not sure why I am receiving this form... I have never gotten one of these before.
A.No. For some reason IRS's computers think you'll be making estimated tax payments for 2006 and are sending you the vouchers so they'll get properly credited. You can read about estimated tax requirements in Publication 505. If you're not required to make payments no response to IRS is necessary. You probably had a balance due last year of a significant amount (more than $1000?) and they are just letting you have the option to make quarterly payments toward 2006. It's not mandatory, but if you anticipate being in a balance due situation again, you might be able to avoid underpayment penalties by making quarterly estimated tax deposits. The 1040-ES (as I'm sure you can tell by reading) is used to "estimate" taxes due for the upcoming year. For those who have no income subject to withholding (e.g., self-employed), it is a device to arrive at a reasonable "guess" at taxes due for the upcoming year, and then make periodic payments to avoid an IRS penalty for _underpayment_. If you received an unsolicited form from the IRS, it's likely because you had a large balance of tax due with your 2005 return -- even perhaps owing a penalty. It's simply a courtesy reminder that there's a method to avoid future penalties. If you're employed and having tax w/h, you should take a moment to verify the w/h will be sufficient to avoid penalty. If not, you can submit a new W-4, claiming fewer or no dependents. If, on the other hand, you have considerable income _not_ normally subject to w/h (e.g., stock dividends, interest on CDs, etc.), you may prefer to join the legions of TPs who regularly use the 1040-ES to pay their tax obligation.
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