- Am I required to make 2015 federal quarterly estimated tax payments?
The Internal Revenue Service (IRS) requires you to make quarterly estimated tax payments for calendar year 2015 if both of the following apply:
- you expect to owe at least $1,000 in federal tax for 2015, after subtracting federal tax withholding and credits, and
- you expect federal withholding and credits to be less than the smaller of:
- 90% of the tax to be shown on your 2015 federal tax return, or
- 100% of the tax shown on your 2014 federal tax return (only applies if your 2014 tax return covered 12 months – otherwise refer to 90% rule above only).
- How do I calculate the amount of my federal quarterly estimated tax payments?
To calculate your federal quarterly estimated tax payments, you must estimate your adjusted gross income, taxable income, taxes, deductions, and credits for the calendar year 2015. Form 1040-ES includes an Estimated Tax Worksheet to help you calculate your federal estimated tax payments. For examples of completed estimated tax worksheets, please refer to theExamples section of this site.
Frequently Asked Questions
- What are the filing dates for federal quarterly estimated tax payments?
|Payment Period||Due Date|
|January 1 – March 31, 2015||April 15, 2015|
|April 1 – May 31, 2015||June 15, 2015|
|June 1 – August 31, 2015||September 15, 2015|
|September 1 – December 31, 2015||January 15, 2016|
*You do not have to make the payment due on January 15, 2016, if you file your 2015 tax return by February 1, 2016 and pay the entire balance due with your return.
- How do I make federal quarterly estimated payments?
The IRS provides various methods for making 2015 quarterly estimated tax payments:
- You may credit an overpayment on your 2014 tax return to your 2015 estimated tax;
- You may mail your payment with a payment voucher form, Form 1040-ES;
- You may pay by phone or electronically using the Electronic Federal Tax Payment System (EFTPS);or
- You may pay via electronic funds withdrawal with your 2014 e-filed return.
- What if I do not pay enough federal income tax in a timely manner for the calendar year 2015?
Generally, if you do not pay enough tax in a timely manner either through withholding or making estimated tax payments, you may be required to pay a penalty.
Please refer to IRS Publication 505, Tax Withholding and Estimated Tax, for a detailed discussion of the underpayment penalty, including exceptions to this penalty.
- How do I obtain additional information regarding federal quarterly estimated tax payments?
Please refer to IRS Form 1040-ES Instructions and IRS Publication 505, Tax Withholding and Estimated Tax, for additional information regarding federal quarterly estimated tax payments or consult your personal tax advisor.
Updated July 22, 2015, to include Red River county.
Updated July 20, 2015, to include Hood, Madison, Shelby and Wharton counties.
Updated July 10, 2015, to include Angelina, Erath, Frio, Jim Wells, Montgomery and Trinity counties.
Updated July 6, 2015, to include Bowie, Brazoria, Cherokee, Ellis and Harrison counties.
Updated June 25, 2015, to include Fayette county.
Updated June 17, 2015, to include Cooke, Dallas, Fannin, Grayson, Liberty, Nueces and Walker counties.
Updated June 8, 2015, to include Bastrop, Blanco, Caldwell, Denton, Eastland, Fort Bend, Gaines, Guadalupe, Henderson, Hidalgo, Johnson, Milam, Montague, Navarro, Rusk, Smith, Travis, Wichita, Williamson, and Wise counties.
HOU-05-2015, June 2, 2015
TEXAS — Victims of the severe storms, tornadoes, straight-line winds and flooding that took place beginning on May 4, 2015 in parts of Texas may qualify for tax relief from the Internal Revenue Service.
Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Texas will receive tax relief.
The President has declared Angelina, Bastrop, Blanco, Bowie, Brazoria, Caldwell, Cherokee, Cooke, Dallas, Denton, Eastland, Ellis, Erath, Fort Bend, Fannin, Fayette, Frio, Gaines, Grayson, Guadalupe, Harris, Harrison, Hays, Henderson, Hidalgo, Hood, Jim Wells, Johnson, Liberty, Madison, Milam, Montague, Montgomery, Navarro, Nueces, Red River, Rusk, Shelby, Smith, Travis, Trinity, Van Zandt, Walker, Wharton, Wichita, Williamson, and Wise counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.
The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after May 4, and on or before Nov. 2, have been postponed to Nov. 2, 2015. This includes the May 15 deadline for many tax-exempt organizations to file their annual Form 990. It also includes the June 15 and Sept. 15 deadlines for making quarterly estimated tax payments. A variety of business tax deadlines are also affected including the July 31 deadline for quarterly payroll and excise tax returns.
In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after May 4, as long as the deposits were made by May 19, 2015.
If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.
The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.
Covered Disaster Area
The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.
Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.
Grant of Relief
Under section 7508A, the IRS gives affected taxpayers until Nov. 2 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 4 and on or before Nov. 2.
The IRS also gives affected taxpayers until Nov 2 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after May 4 and on or before Nov. 2.
This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.
The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 4 and on or before May 19 provided the taxpayer made these deposits by May 19, 2015.
Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Texas, Severe Storms, Tornadoes, Straight-line Winds and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.
The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.
Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.
Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-829-3676. The IRS toll-free number for general tax questions is 800-829-1040.
On July 22, 2015, the Senate Committee on Finance voted 23-3 to extend bonus depreciation and enhanced Section 179 deduction for 2015. The Senate is looking to be more proactive with passing tax extenders rather than waiting until December like in recent years. Currently, bonus depreciation and $500,000 limits for Section 179 deductions are extended through 2014.
Bonus depreciation may result in substantial present value tax savings for businesses that already had plans to purchase or construct qualified property. Unlike section 179 expensing, you do not need net income to take bonus depreciation deductions. Further, bonus is not limited to smaller businesses or capped at a certain dollar level, but it is not available for used property, property used outside of the US, tax-exempt use property, or tax-exempt financed property. Also, many states are likely to opt out of this provision for state income tax purposes.
Bonus depreciation has generally been available since Sept. 11, 2001, with a period of expiration in 2005, 2006, and 2007, and has ranged from 30 percent to 100 percent over the years, as shown in this chart:
|Start date||End date||Bonus amount|
Newly constructed or original use property with a recovery period of 20 years or less (real or personal), qualified leasehold improvements, certain computer software, and water utility property are eligible for bonus depreciation. Only new property is eligible for bonus depreciation; used property is not eligible.
Long production property
While placed-in-service dates for long production property generally are in effect for property placed in service before Jan. 1, 2016, only costs incurred before Jan. 1, 2015, are eligible for bonus—this is known as the progress expenditure rule. For example, a building owner contracts for $2 million of qualified tenant improvements and begins construction in 2013, during the 50 percent bonus window. By the end of 2013, they incurred $1.2 million. Construction is completed in 2014 and the improvements are placed in service in June of that year. Under the progress expenditure rule, $1.2 million is eligible for 50 percent bonus.
Long production property is property that has a recovery period of at least 10 years, an estimated production period of more than two years, or an estimated production period of more than one year and a cost of more than $1 million. Transportation property is tangible personal property used in the trade or business of transporting persons or property.
Qualified leasehold, retail, and restaurant property
Qualified leasehold improvements are generally bonus eligible, if made under a lease to the interior portion of a building occupied by a tenant and placed in service more than three years after the building was first placed in service. Qualified restaurant property and qualified retail improvement property are not eligible for bonus depreciation; however, under section 179, taxpayers may expense up to $250,000 of the cost for these improvements as well as qualified leasehold improvements. This benefit applies to property placed in service during 2010 to 2014. The treatment details for these three types of property are summarized below.
1The section 179 amount is limited to $250,000; phase out begins at $1,000,000 of total qualified property. Qualified property does not include air conditioning or heating units. The total section 179 amount for years 2010-2014 is $500,000; phase out begins at $2,000,000 of total qualified property.
Electing out of bonus and section 179
For taxpayers that want to spread out their cost-recovery deductions, one alternative is to elect out of bonus depreciation and selectively expense the cost of eligible acquisitions under section 179. Keep in mind many states have not adopted the recent higher federal section 179 limits, and there may be other restrictions to the deductions.
|Qualified Leasehold Improvement Property (QLIP)||Qualified Leasehold Improvement Property (QLIP)||Qualified Retail
Improvement Property (QRIP)
|Qualified Restaurant Property (QRP)|
|Life of Real Property||39||15||15||15||15|
|Depreciation Method||Mid-month, straight-line||Half-year, straight-line||Half-year, straight-line||Half-year, straight-line|
|179 Eligible1||No||Yes – 1/1/10-12/31/14||Yes – 1/1/10-12/31/14||Yes – 1/1/10-12/31/14||No|
|Building Age Requirement||3 years or older||3 years or older||3 years or older||None||3 years or older|
Landlord and tenant can’t be related party, improvement must be to an interior portion of a nonresidential building, enlargement / elevators / escalators / common area / internal structural framework excluded
Improvement must be to an interior portion of a nonresidential building, portion of improvements must be open to the general public and used in the retail trade or business of selling tangible personal property to the general public, enlargement/elevators/escalators/common area/internal structural framework excluded
A building, or an improvement to a building, if more than 50% of building’s square footage is devoted to preparation of, and seating for on-premises consumption of, prepared meals
Since 2009, the IRS has operated an Offshore Voluntary Disclosure Program (OVDP) for U.S. taxpayers who have failed to disclose foreign assets or report foreign income from those assets to the IRS or Treasury. The program provides reduced penalties and other benefits, thus giving taxpayers an opportunity to address their past noncompliance and “become right” with the government.
The IRS reports that 45,000 taxpayers have made voluntary disclosures since 2009 and have paid $6.5 billion in back taxes, interest, and penalties. In 2014, the IRS made important changes to the OVDP, with the expectation that the revised program will lead to a significant increase in the number of U.S. taxpayers who participate in the OVDP and report their undisclosed foreign assets.
U.S. taxpayers, including U.S. citizens living abroad, must report and pay taxes on their worldwide income, including income from foreign assets. Taxpayers must report foreign accounts on Form 1040, Schedule B; if their value exceeds certain thresholds, they must report on Form 8938, Statement of Foreign Financial Accounts. Taxpayers with accounts worth more than $10,000 must report the accounts on the Report of Foreign Bank and Financial Accounts (FBAR), which is filed with Treasury (not the IRS).
The IRS provided temporary OVDPs in 2009 and 2011. In 2012, it opened another OVDP that it continues to offer. Under the 2012 program, taxpayers must enter into a closing agreement with the IRS, provide updated returns for the prior eight years, and pay a penalty as high as 27.5 percent. In return, the IRS agrees not to pursue criminal penalties against taxpayers who may have willfully failed to report their foreign assets and/or income. In 2012, the IRS also unveiled a “streamlined procedures” program, with lighter penalties for U.S. taxpayers residing abroad who were nonwillful evaders.
The revised streamlined procedures program has been expanded to taxpayers living in the United States. Participants are no longer required to have an unpaid tax balance of $1,500 or less per year. Participants self-certify that their noncompliance was not willful; the IRS will review their circumstances. Taxpayers must pay taxes on any unreported income from the past three years and must file required FBAR reports for the previous six years. Participants living abroad pay no penalty, while U.S. residents pay a miscellaneous offshore penalty of five percent.
The OVDP program for potentially willful evaders has been tightened. Taxpayers must provide increased information and must pay the 27.5 percent penalty at the time of application. In light of the expanded streamlined program, the IRS eliminated reduced penalties (five and 12.5 percent) that had been offered to nonwillful OVDP participants. To increase the pressure on nonfilers, the IRS increased the penalty from 27.5 percent to 50 percent for taxpayers who used a foreign financial institution or a facilitator that the IRS or Justice Department publicly acknowledges to be under investigation.
Taxpayers are advised to consult with their tax adviser about these programs and choose carefully. A taxpayer cannot participate in both the streamlined and the OVDP programs; it is an either/or proposition. If a taxpayer is confident that his or her noncompliance was not willful, the streamlined program is a reasonable choice. However, this program provides no protection from criminal prosecution, further audits, or proposed tax increases, if the IRS decides that the taxpayer acted willfully.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
The Tax Code contains many taxpayer rights and protections. However, because the Tax Code is so large and complex, many taxpayers, who do not have the advice of a tax professional, are unaware of their rights. To clarify these protections, the IRS recently announced a Taxpayer Bill of Rights, describing 10 rights taxpayers have when dealing with the agency.
The idea for a Taxpayer Bill of Rights has been percolating for several years. One of the leading proponents has been National Taxpayer Advocate Nina Olson. In January 2014, Olson told Congress that a Taxpayer Bill of Rights was long overdue. Even though the rights already existed, many taxpayers did not know about them. More taxpayer education was needed, Olson emphasized. Olson proposed that either Congress pass legislation or the IRS take administrative action to set out a Taxpayer Bill of Rights.
Olson proposed that a Taxpayer Bill of Rights be based on the U.S. Bill of Rights. Olson also recommended that the IRS describe taxpayer rights in non-technical language. Olson’s proposal won support from IRS Commissioner John Koskinen earlier this year.
Taxpayer Bill of Rights
In June, IRS Commissioner John Koskinen and Olson together unveiled a 10-point Taxpayer Bill of Rights.
The provisions in the Taxpayer Bill of Rights are:
- The Right to Be Informed
- The Right to Quality Service
- The Right to Pay No More than the Correct Amount of Tax
- The Right to Challenge the IRS’s Position and Be Heard
- The Right to Appeal an IRS Decision in an Independent Forum
- The Right to Finality
- The Right to Privacy
- The Right to Confidentiality
- The Right to Retain Representation
- The Right to a Fair and Just Tax System
“The Taxpayer Bill of Rights contains fundamental information to help taxpayers,” Koskinen said. “These are core concepts about which taxpayers should be aware. Respecting taxpayer rights continues to be a top priority for IRS employees, and the new Taxpayer Bill of Rights summarizes these important protections in a clearer, more understandable format than ever before.”
As the IRS Commissioner noted, the Taxpayer Bill of Rights does not create new rights. Rather, the Taxpayer Bill of Rights is intended to serve an educational purpose to help taxpayers understand better their existing rights.
IRS Publication 1
The Taxpayer Bill of Rights is highlighted prominently in IRS Publication 1, Your Rights as a Taxpayer. The IRS reported that updated Publication 1 will be sent to taxpayers when they receive notices on issues ranging from audits to collections. Updated Publication 1 initially will be available in English and Spanish, and later in Chinese, Korean, Russian and Vietnamese.
Additionally, the IRS created a special page on its website to highlight the Taxpayer Bill of Rights. The Taxpayer Bill of Rights will be displayed in all IRS offices.
If you have any questions about the IRS Taxpayer Bill of Rights, please contact our office.
See article; Tips for employers Who Outsource Payroll Duties