State estimated tax payments are payments you make directly to your state tax agency throughout the year on income that may not have state taxes automatically withheld.
This type of income may include:
- Self-employment income
- Interest income
- Dividend income
- Rental income
- Capital gains from the sale of assets
- Prize or award winnings
- Alimony received (if applicable under your state's tax rules)
You may also choose to make estimated tax payments if the state tax withheld from your paycheck, pension, or other income isn't enough to cover your expected state tax liability.
Why Would I Need to Pay State Estimated Taxes?
Many taxpayers never need to make estimated tax payments because their employer withholds enough state income tax from each paycheck.
However, you may need to make state estimated tax payments if you:
- Are self-employed
- Operate as a sole proprietor
- Are a partner in a partnership
- Are an S corporation shareholder
- Receive significant income that isn't subject to withholding
- Expect to owe state income tax when you file your return
Making estimated payments during the year can help you avoid a large balance due at filing time and may reduce or eliminate underpayment penalties imposed by your state.
Keep in mind that estimated tax requirements vary by state. Each state sets its own rules regarding who must make estimated payments and when those payments are due.
Where Do I Report My State Estimated Tax Payments?
State estimated tax payments are entered in the Federal section of the program and are then applied to the appropriate state return.
To enter your state estimated tax payments:
- Go to Federal
- Select Payments & Estimates
- Choose State Estimated Tax Payments
Enter each payment based on the date it was actually made.
Important
Do not enter state tax withholding as a state estimated tax payment.
State estimated tax payments and state tax withholding are two different types of tax payments:
- State estimated tax payments are payments you personally send to the state tax agency.
- State tax withholding is tax automatically withheld from wages, pensions, or other income and reported on forms such as a W-2 or 1099.
Entering withholding amounts as estimated payments can cause your return to be incorrect.