If you earned more than $8,000 during the year, you may have to pay Pennsylvania estimated tax payments.
Who has to pay estimated tax payments?
If you’ll have to file a Pennsylvania income tax return and will owe Pennsylvania estimated taxes, you may need to make estimated tax payments.
Many people meet the estimated tax requirements through payroll withholding. If you have a W-2 job in Pennsylvania, your employer should automatically withhold taxes for you. Since Pennsylvania has a flat income tax rate, you don’t even need to fill out a Pennsylvania W-4.
If you work as an employee in Indiana, Maryland, New Jersey, Ohio, Virginia, or West Virginia, your employer will also usually withhold your Pennsylvania personal income tax for you.
You may need to make estimated tax payments if you:
- Work as an independent contractor and don’t have taxes withheld
- Work as an employee for an out-of-state employer that doesn’t withhold Pennsylvania personal income tax
- Have investment or other income that doesn’t have taxes withheld
Pennsylvania estimated taxes are separate from IRS estimated taxes. Depending on where you live and work, you may also need to make local tax payments such as Philadelphia BIRT.
If you’re a resident of another state or did work in another state, you may also need to make estimated tax payments to that state.
What is the minimum amount to pay estimated taxes?
You generally need to pay estimated taxes if you expect to receive $8,000 or more in income not subject to employer withholding. Examples include self-employment income, investment income, or working for an out-of-state employer who doesn’t withhold PA tax.
You may have to pay an estimated tax penalty if you don’t pay enough estimated taxes to cover either:
- 100% of your total income from the previous year times the current year’s tax rate*
- 90% of your current year’s tax
*The Pennsylvania 100% rule is slightly different than the IRS rule. With the IRS, if you had a $1,000 tax liability last year, you can avoid a penalty by paying $1,000 in estimated taxes this year.
In Pennsylvania, the amount you owe could change with the tax rate. For example, if you had $10,000 in taxable income and paid 3% ($300) last year but the tax rate goes up to 4% ($400), you’ll need to make $400 in estimated tax payments. If the tax rate goes down, the reverse is true and your estimated tax payments might be lower than your taxes for the last tax year.
Where do you pay estimated taxes?
You can either pay online at myPATH.pa.gov or mail form PA-40ESR to the Department of Revenue.
Note: Payments greater than $15,000 may be subject to a penalty if you don’t pay online.
When are Pennsylvania estimated taxes due?
Pennsylvania generally uses the same dates as the IRS.
- Quarter 1: April 15th
- Quarter 2: June 15th
- Quarter 3: September 15th
- Quarter 4: January 15th
If the date falls on a weekend or holiday, you normally have until the next business day to pay. Since the IRS sometimes pushes their due date back for non-federal, Washington D.C. holidays, IRS and Pennsylvania adjustments for holidays may not always match up.
Except in cases of uneven income, you should generally either make four equal payments or pay 100% of your estimated taxes in Quarter 1.
If you pay extra in an early quarter, you can normally reduce your payment in a later quarter. However, making uneven payments will require you to do extra paperwork when you file your taxes.
If you realize your income for this year will be higher and you’ll owe more taxes, you may find it easier to 1) pay your estimated taxes based on 100% of last year’s taxes and 2) save the additional tax you’ll owe in a savings account until it’s time to file your tax return.
Normally, you must make four equal payments during the year (unless you choose to pay an additional amount). If your income is seasonal or goes up late in the year, you may need to file Form REV-1630 to avoid a penalty.
Form REV-1630 breaks your income down by quarter.
For example, you own a Christmas tree stand that only operates in December. Your tax liability is $4,000. You can either:
- Pay $1,000 per quarter.
- File Form REV-1630 to show all your income was from during the 4th quarter and pay $4,000 in the 4th quarter. Without Form REV-1630, the Department of Revenue will assume you should have been paying $1,000 per quarter and charge you a penalty.
What is the penalty for not paying Pennsylvania estimated taxes?
If you don’t pay enough in estimated taxes, you’ll have to pay interest. The current rate is 3%.
Interest works just like a credit card or bank loan. The amount you’ll pay is based on how much you owe and the due date. Interest accrues daily.
What if I paid too much?
If you paid too much in Pennsylvania estimated taxes because your income went down or you overestimated what you’ll owe, you can request a refund when you file your income tax return. There’s generally no way to get a refund before filing.
Related: Pennsylvania SUI Taxes