How do I pay quarterly taxes to avoid penalties from receiving natural gas royalties?

by Gregory Paulding, CPA | Jan 04, 2019
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I am receiving royalties from natural gas. How do I pay quarterly taxes to avoid penalties? What form should I use, and where do I send the money and estimates as to the percentage I should pay?

Quarterly estimated tax paying is an appropriate practice to perform so that income tax penalties and accumulating tax liabilities don’t get too high beyond reason and your ability to pay. The IRS’s website is a good resource for the questions to which you seek answers.
 
In a nutshell, you may use several online estimated tax calculators (or the IRS estimating worksheets) to determine your expected tax liability. If your liability is $1,000 or more, then you should divide that amount into quarterly payments (or the remaining quarterly payment deadlines) to pay. You can pay the estimated amounts by mail (using a voucher), by phone, or online. The forms, dates, and addresses to mail the vouchers can be found in the instructions for Form 1040-ES. All of these may be downloaded for your convenience.
  
Again, I suggest you review the information on the IRS’s website cited above, and talk with your tax professional for more assistance.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Gregory Paulding, CPA, is president of Paulding & Associates PC in Erie, Pa.

Disclaimer
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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