You may need to file quarterly tax estimates if you are self employed, retired, have a side job or don’t withhold enough income taxes through your job or pension.

Failing to send in estimates could result in a penalty if you expect to owe $1,000 or more when you file your return.

To avoid the penalty for not paying enough estimated tax, you need to pay in at least 90% of your 2009 tax liability or 100% of your 2008 tax liability, whichever is less.

Alternatively, you can choose to file and pay your 2009 taxes by January 31, 2010 to avoid any underpayment penalties.

Use Form 1040-ES to submit your estimated tax payment.

For a refresher on estimated tax payments, see ‘Do I Need to Make Estimated Tax Payments?’

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This estimate goes towards your 2008 tax liability so it reduces the amount you will owe on your 2008 tax return when you file.

To avoid the penalty for not paying enough estimated tax, you need to pay in at least 90% of your 2008 tax liability or 100% of your 2007 tax liability, whichever is less.

Alternatively, you can choose to file and pay your 2008 taxes by January 31, 2009 to avoid any underpayment penalties.

Use Form 1040-ES to submit your estimated tax payment.

For a refresher on estimated tax payments, see ‘Do I Need to Make Estimated Tax Payments?’

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