Estimated Taxes

Both the IRS and the Commonwealth of Virginia require taxes to be paid as income is earned throughout the year. Payments are made in two ways:

  • Withholding – taxes automatically withheld from wages or certain types of income.
  • Estimated payments – taxes paid directly when income is not subject to withholding.

Estimated payments are often necessary for income such as:

  • Rental or business income
  • Independent contractor work
  • Investment gains from stocks or bonds

Who Needs to Pay Estimated Taxes?

  • Individuals who expect to owe $1,000 or more when filing
  • Corporations that expect to owe $500 or more

Failing to make required payments may result in penalties and interest at tax time.

How to Make Payments