You may need to make Alabama estimated tax payments if you expect to owe tax and do not have enough tax withheld from your income during the year.
Estimated tax payments are commonly required for taxpayers who:
- Are self-employed.
- Receive investment income.
- Receive rental income.
- Receive retirement income with little or no withholding.
- Have other income that is not subject to withholding.
General Rule
You may need to make Alabama estimated tax payments if:
- You expect to owe $500 or more in Alabama tax after subtracting withholding and credits.
- Your withholding and credits will be less than the smaller of:
- 90% of the tax expected to be shown on your current-year Alabama return, or
- 100% of the tax shown on your prior-year Alabama return.
Special Rule for Higher-Income Taxpayers
If your Alabama Adjusted Gross Income (AGI) for the prior year was more than:
- $150,000, or
- $75,000 if Married Filing Separately,
use 110% of your prior-year tax liability instead of 100% when determining whether you have paid enough tax through withholding and estimated payments.
How Can I Avoid Estimated Tax Penalties?
You can generally avoid an underpayment penalty by making sure enough tax is paid throughout the year through:
- Alabama withholding from wages or other income,
- Alabama estimated tax payments, or
- A combination of both.
If you owed a significant amount when filing your Alabama return this year, consider:
- Increasing your Alabama withholding, or
- Making quarterly estimated tax payments for next year.
How Do I Make Alabama Estimated Tax Payments?
If you determine that estimated payments are needed, complete Form 40-ES, Estimated Tax Voucher, to calculate and submit your payments.
Estimated payments are generally made throughout the year rather than waiting until you file your tax return.
Navigation
Use the following navigation to enter or review estimated tax information:
To Enter Alabama Estimated Tax Payments Already Made
Federal → Payments & Estimates → State Estimated Tax Payments
Any Alabama estimated tax payments entered in this section will transfer to your Alabama return when applicable.
To Review or Generate Estimated Tax Vouchers
State Return → Alabama → Miscellaneous Forms → Form 40-ES (Estimated Tax Vouchers)
To Review an Underpayment Penalty
State Return → Alabama → Miscellaneous Forms → Form AL 2210 (Underpayment of Estimated Tax)