S Corp Estimated Tax Payments: Everything You Need to Know
S corp estimated tax payments are only necessary if you have an S corp and tax season does not last for one day for businesses.3 min read
Updated October 29, 2020:
S corp estimated tax payments are only necessary if you have an S corp. When you own a business, tax season does not last for one day. Rather, you must pay a series of taxes as the year progresses.
If you work for an employer, he or she most likely holds your taxes throughout the year. If you are self-employed, or own your own business, you would pay taxes to your state and the IRS. The IRS will not issue warnings about estimated tax payments. Partially, this is because the balance owed is not clear until you file a tax return.
If you intend to file as self-employed or a disregarded entity, you need to complete Form 1040-ES. Form 1040-ES also has blank vouchers so you can mail in your estimated payments. You may also make payments via the Electronic Federal Tax Payment System.
Estimated Payment Scenarios
You owe $1,000 or greater in taxes when filing an income tax return. You may need to make estimated payments to the IRS and your state government as well. With that, you may come across an exception if the withholdings and credits amount to as much as your previous tax year. Therefore, you would not have to make federal estimated payments. Such a scenario would apply to the following business entities:
- Sole proprietorships
- S corp shareholders
- Single-member LLCs that choose to taxed as an S corp or partnership
Another scenario is if you are a corporate owner who needs to make estimated payments if you would owe $500 or greater upon tax filing. If the business is an S corp or multiple-member LLC, your portion of the business profits would be shown on Schedule K-1, a form that’s included with your personal return.
You may also need to pay estimated taxes in the following circumstances:
- How much you would owe
- Your legal entity type
Estimated payments are portioned into four payment intervals throughout the year:
- April 15: Income for January 1 through March 31
- June 15: Income for April 1 to May 31
- September 15: Income for June 1 to August 31
- The following January 15: Income from September 1 to December 31
Once the IRS has your business in the system, officials will send estimated payment vouches at the end of every tax year. With that, you must still pay the federal and state taxes, even if you do not receive the vouchers.
Your business must also report all business activity via Form 1120S and include a Schedule K-1 for all shareholders. Schedule K-1s note the shareholder’s portion in the business so they report such information on their personal tax returns. If an S corp cannot file by March 15, the business can apply for a six-month extension that’s automatic. You must use Form 7004 and send it to the IRS to get an extension.
Shareholders who pay business income tax must adhere to the same deadlines as individual taxpayers, which is April 15. If the S corp pays a wage to employees, the S corp must withhold federal taxes in the form of Medicare and Social Security taxes. Such withholdings require Form 941 and must be filed every quarter to note aggregate amounts of withholding. Form 941 is due on the following dates:
- January 31
- April 30
- July 31
- October 31
The addition of employees requires Form 940 to file a Federal Unemployment Tax Return on a yearly basis. If the business pays wages amounting to $1,500 or greater during any calendar quarter, or has a minimum of one employee working at least a portion of the day or 20 or more weeks, the business must submit Form 940.
Form 940 notes the wage amount that an S corp owes in unemployment taxes to the IRS. You must submit Form 940 by January 31 annually. If your business pays its entire tax balance on time, you do not have to file Form 940 until February 10.
If you need to learn more about S corp estimated tax payments, submit your legal inquiry to our UpCounsel marketplace. UpCounsel’s lawyers have graduated from some of the best law schools in the country and will help you through the ins and outs of tax filings and business expenses. In addition, they will be at your side if you are unsure about the S corp filling process.