• If a taxpayer expects a balance due of $500 or more on next year’s (2025) California tax return, they should:
    • Increase withholding from their paychecks (Form DE 4 is available online and from their employer).
    • Increase withholding from their retirement income (Form DE 4P at edd.ca.gov/pdf_pub_ctr/de4p.pdf can be completed online, then printed).
      • Note: State tax can’t be withheld from Social Security or unemployment payments.
    • If withholding is unavailable, make estimated payments to avoid penalties.
  • CA estimated-payment requirements are slightly different from the IRS requirements, but are generally close enough that the same procedures can be used to estimate the tax.
    • If the current tax return and next year’s are expected to be about the same, use the current CA Form 540 to determine how much in estimated payments should be made next year.
    • If a substantial change in income, filing status, dependents, or credits is expected in the coming year, or has already happened by the time the current return is being prepared, consider using the California Estimated Tax Worksheet in the instructions for CA Form 540-ES.
  • A taxpayer must pay at least the following to avoid a FTB penalty (for paying the bulk of estimated taxes later in the tax year than they should be). For a tax year, those amounts are:
    • 30 percent first quarter (due mid-April)
    • 40 percent second quarter (due mid-June)
    • 0 percent third quarter (due mid-September)
    • 30 percent fourth quarter (due mid-January of next calendar year). 
  • Although the stated amount for the third quarter is 0%, CA Form 540-ES does include a form to be mailed in the third quarter, and TaxSlayer does print the third quarter form even when the dollar amount entered in TaxSlayer for that quarter is zero. This CA Payment 3 should be ignored.
  • To create CA 540-ES vouchers, go to the Estimated Payment Vouchers, Form 540ES page [State Section > Miscellaneous Forms > ...] and enter dollar amounts for the first, second, and fourth quarters. 
    • Use the required percentages (30-40-0-30) to allocate the desired total amount estimated payments.
  • The 540-ES forms print as part of the PDF for the tax return.
    • Make sure the taxpayer understands that it is not required, when mailing in a Form 540-ES, to pay exactly what is on the printed page. They can make a payment in a different amount; if they do, they should simply line through the printed amount on Form 1040-ES and write in the actual amount being paid.
    • Taxpayers can also pay by direct debit from a bank account (no fee) or credit card (additional fee). See all options and instructions at ftb.ca.gov/pay.

Created with the Personal Edition of HelpNDoc: Free Qt Help documentation generator