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For some workers, tax season doesn’t end on April 19.

Freelancers, contractors, and any professional who doesn’t have taxes withheld from paychecks may be required to make an estimated tax payment at the end of each quarter in Massachusetts. The Department of Revenue (DOR) has guidelines to determine if you are someone who must pay estimated taxes.

Who Must Pay Estimated Taxes?

If you receive more than $400 in taxable income which hasn’t had any taxes withheld from it, you should be paying estimated taxes. While employment is often the main source of earnings for most individuals, there are other forms of income that haven’t had taxes withheld:

  • Gains from the sale or exchange of capital assets
  • Income from a business
  • Income from an estate or trust
  • Rental income
  • Lottery winnings
  • Unemployment compensation (if you did not elect voluntary Massachusetts withholding)
  • Dividends and interest income
  • Income from some retirement plans

When to File

You should file estimated taxes in four installments at the end of each quarter. Each payment should total 25 percent of the annual estimated taxes and be paid by the following deadline dates:

  • Installment 1 — April 15, 2016
  • Installment 2 — June 15, 2016
  • Installment 3 — Sept. 15, 2016
  • Installment 4 — Jan. 15, 2016

How to File

You can submit installment payments online with DOR’s WebFile for Income tool, or you can mail payments and forms to:

Massachusetts Department of Revenue

P.O. Box 7007

Boston, MA, 02204

You may use WebFile for Income to set up automatic estimated tax payments, simplifying the process. However, electronic payment isn’t required, and there are a few main estimated tax forms for 2015 that should be used to file and calculate estimated tax liability.

Overpayments and Underpayments of Estimated Taxes

If you have overpaid or underpaid your estimated taxes, here are actions you can take to address the issue:

Alternative to Estimated Tax Payments

You can request that employers withhold earnings to cover income tax by completing Form M-4 (Massachusetts Employee’s Withholding Exemption Certificate). This ensures that taxes are taken out of each paycheck, eliminating the need to pay estimated taxes.

More Information on Estimated Tax Payments

If you want to learn more about estimated tax payments in Massachusetts, visit the DOR website or call DOR’s customer service call center at (617) 887-6367 or toll-free in Massachusetts at (800) 392-6089.

Organizing your financial records and setting payment reminders can help you stay on top of your estimated tax obligations for years to come.

When do you start preparing for tax season? Let us know by commenting below or tweeting @MassGov.

 

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