Estimated tax payments
Quarterly payments a taxpayer makes directly to a state when nothing is being withheld on their behalf — the standard arrangement for 1099 contractors.
Where withholding covers a W-2 employee automatically, a contractor has to move the money themselves, on a quarterly schedule, to each state entitled to tax the income. Underpaying attracts a penalty even where the eventual return shows a refund, because the penalty is for paying late rather than for paying too little.
A cross-border commuter can need them too. Where a work state withholds but the home state also taxes the income, payroll frequently withholds for only one of the two — which leaves a home-state balance that estimated payments through the year are meant to cover.
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What is estimated tax payments?
Quarterly payments a taxpayer makes directly to a state when nothing is being withheld on their behalf — the standard arrangement for 1099 contractors.