How do I figure my estimated tax payments?
Generally, you must make estimated tax payments if you expect to owe at least $500 ($250 if married/RDP filing separately) in tax for 2016 (after subtracting withholding and credits) and you expect your withholding and credits to be less than the smaller of:
- 90% of the tax shown on your 2016 tax return; or
- 100% of the tax shown on your 2015 tax return including Alternative Minimum Tax (AMT).
Limit on the Use of Prior Year’s Tax
Individuals who are required to make estimated tax payments, and whose 2015 California adjusted gross income is more than $150,000 (or $75,000 if married/RDP filing separately), must figure estimated tax based on the lesser of 90% of their tax for 2016 or 110% of their tax for 2015 including AMT. This rule does not apply to farmers or fishermen.
Taxpayers with 2016 California adjusted gross income equal to or greater than $1,000,000 (or $500,000 if married/RDP filing separately), must figure estimated tax based on their tax for 2016.
Important: California differs from federal. To avoid an estimate penalty, you must pay at least:
- 30 percent First quarter (April 18)
- 40 percent Second quarter (June 15)
- 0 percent Third quarter (September 15)
- 30 percent Fourth quarter (January 17)
Please use the California Estimated Tax Worksheet in the Instructions for Form 540-ES, Estimated Tax for Individuals (540ES Form Instructions) to figure your estimated tax payments.
Use Form 540-ES, Estimated Tax for Individuals, to pay your estimated tax installments.