Payment of Taxes

In New Jersey, as in many other states, there are requirements to make estimated tax payments if you expect to owe a certain amount of tax when you file your return. Here's a breakdown of the general rules:

Federal Requirements

(which often align with state requirements):

For the federal government, to avoid penalties, you generally need to pay at least the lesser of:

• 90% of the tax you will owe for the current year, or
• 100% of the tax shown on your prior year's tax return (110% if your adjusted gross income was more than $150,000).
  

New Jersey Estimated Tax Requirements:

New Jersey follows similar rules to the federal guidelines with some specifics:

• If you expect to owe $400 or more in New Jersey Income Tax (after subtracting withholdings and other credits), you should make estimated payments.

To avoid penalties, you should pay either:

• 80% of the tax liability for the current year, or
• 100% of the tax liability from the prior year (110% if your prior year's adjusted gross income was over $150,000).
  

How to Make Estimated Payments in New Jersey:

1. Quarterly Payments: Estimated tax payments are due four times a year, typically on:
2. April 15
3. June 15
4. September 15
5. January 15 of the following year
6. Payment Methods: You can make payments online through the New Jersey Division of Taxation website, by mail, or via electronic funds transfer.
   

Penalties for Underpayment:

If you don't pay enough tax through withholding or estimated payments, you might have to pay a penalty. This is calculated based on the amount of the underpayment and the period it was underpaid.

To ensure you meet these requirements:

• Calculate your estimated tax liability accurately.
• Make timely estimated payments.
• Adjust your withholdings if needed to cover your tax liability.