Does Your Client Know that the Estimated Tax Payment Percentages Changed for 2010?
In 2009, the estimated payment percentages were 30 percent, 30 percent, 20 percent, and 20 percent for respective quarters. For taxable years beginning on or after January 1, 2010, the estimated tax payment percentages have change for individuals and corporations. The third quarter estimated tax payment was eliminated by the revised percentages. The percentages for 2010 are now 30 percent, 40 percent, 0, and 30 percent for the first, second, third, and fourth quarter installments.
The estimated tax is payable in four installments by individuals and corporations. For individuals who file their return on a fiscal year basis, the due dates for the installment payments are the 15th day of the fourth, sixth, and ninth month of their fiscal year and the first month of the following fiscal year.
Generally, individuals must make estimated tax payments if they expect to owe at least $500 ($250 if married/RDP filing separately) in tax for 2010 (after subtracting withholding and credits), and they expect their withholding and credits to be less than the smaller of:
- 90 percent of the taxes shown on their 2010 tax return.
- The tax shown on their 2009 tax return, including AMT.
Corporations incorporated or qualified under the laws of California or doing business in California, whether active, inactive, or having income from sources within California, unless otherwise provided by the Corporation Tax Law, are required to make estimated tax payments. For corporations, the estimated tax payments are due and payable by the 15th day of the fourth, sixth, ninth, and twelfth month of the taxable year for corporations. The amount of each installment is the applicable percentage of the total estimated tax due (estimated income multiplied by the appropriate tax rate).
Corporations not required to make an estimated tax payment for the first quarter would be required to make estimated tax payments of 60 percent, 0, and 40 percent for the second, third, and fourth quarter installments, respectively. Corporations not required to make an estimated tax payment for the first and second quarter would be required to make estimated tax payments of 70 percent and 30 percent for third and fourth quarter installments, respectively.
For more information on estimated tax payments for individuals, see the 2010 Instructions for Form 540-ES, Estimated Tax for Individuals, and the 2010 Instructions for 100-ES Form, Corporation Estimated Tax, at ftb.ca.gov.