Before the year ends, small business owners should revisit their estimated tax payments to ensure they have paid enough to cover the income received during the 2021 tax year. The fourth quarter estimated tax payments are due by January 15 so any final amounts should be made by this. When estimated tax payments are made, these count as credits on the tax return similar to W-2 withholdings for those taxpayers that are employees. Based upon how much has been paid during the year, either a refund is given or further amount is due.
The IRS requires individuals, which includes sole proprietors, partners, and S corporation shareholders, to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. For corporations, the amount is $500 or more.