Estimated Tax Facts

Questions About West Union Estimated Tax

WHAT IS “ESTIMATED TAX”? Most people regularly have income taxes withheld from their paycheck. That money is then sent by their employer to the proper federal, state or local government. Employees that do not have taxes withheld regularly are responsible for sending the taxes that would normally be withheld by their employer. This tax is what they call Estimated Tax. It is for employees or business owners who owe taxes to the federal, state, or local government and do not have the taxes regularly deducted from their paycheck.

HOW DO I DETERMINE HOW MUCH “ESTIMATED TAX” I SHOULD PAY? Since you won’t know for certain the exact amount of money you will earn in any year, you need to “estimate” that amount to help determine the amount of taxes you may owe. The method most people use to determine their estimated tax is to multiply the amount of taxable earnings reported on last year’s tax return by the tax rate. In the case of West Union taxes, you would multiply the amount of taxable earnings by the tax rate of 1% (.01). For example, a person with an annual income last year of $16,000, would multiply that amount times 1% (.01) to determine that the amount of estimated taxes they would owe would be $160.00 for the year.

HOW OFTEN IS “ESTIMATED TAX” PAID? After the amount of estimated tax is determined, take 90% of the estimated tax and divide it by four (4) and pay that amount once every three months. The payments will be due on April 15, June 15, September 15, and January 15 of the following year. Failure to make estimated tax payments by the appropriate due dates may result in penalty and interest charges for underpayment of estimated tax. (See question "What if I don't pay estimated tax").

IS ESTIMATED TAX ACTUALLY PREPAYMENT OF TAXES? Estimated tax is not prepayment of taxes, in fact it is really paying taxes later than people who have their taxes withheld from each paycheck. People who pay estimated tax are not billed for the tax they owe until the end of each three month period. They are then required to pay the amount of taxes that should have been deducted from their paycheck for the previous three months. Employees who have their taxes withheld from each paycheck are paying their taxes during each pay period.

IS MY EMPLOYER REQUIRED TO WITHHOLD MY WEST UNION TAXES? Employers located inside West Union are required to withhold West Union taxes from their employee earnings. Employers outside West Union are encouraged to withhold West Union taxes but are not required. If your employer is willing to withhold and remit your West Union taxes, they can contact the Income Tax Bureau for information on this procedure.

WHAT IF I DON’T PAY “ESTIMATED TAX”? If your net tax liability is in excess of $200 annually and you don’t file and pay at least 90% of your tax liability to West Union, you may be charged interest and penalty on the amount of taxes you should have paid during the year.

WHERE CAN I OBTAIN ADDITIONAL INFORMATION OR FORMS? Forms are available outside the Village Clerk’s office at 33 Logans Lane. Office hours of the Income Tax Bureau-- during tax season in person at 33 Logans Lane (January 29 – April 15) on Tuesdays, 3:00 p.m. – 6:00 p.m. and Saturdays 8:00 a.m. to 2:00 p.m.

If you have any additional questions regarding the West Union Income Tax, please call 937-217-8855 and leave a message. Your call will be returned as soon as possible.