Estimated Tax Payments
Estimated tax is a process to pay quarterly tax payments on income that is not subject to withholding. The income that is included is from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards; you may also have to pay estimated tax if the amount of income tax being withheld from your salary, pension or other income is not enough.
As an U.S. tax payer you may need to pay estimated taxes even though you are overseas. Also, if you owe tax, the balance due must be paid in full by April 15th, even though as an American expat you have an automatic extension till June 15th. The June 15th extension only applies to filing, not payment.
If you are excepting to owe $1,000 or more on your American expat tax return, you will be required to make estimated tax payments or you may be subject to interest and penalties. The exception to this rule is that you will be exempt from the underpayment penalty if you have paid at least 90% of the tax you owe for the current year or if you have paid 100% of your tax liability from the previous year.
How much will you be paying? All depends on your credits, deductions and your taxable income. Take advantage of the information here and if you still have more questions, please feel free to give us a call or contact us on our website!