IRS Publication 17 — Your Federal Income Tax (Individuals)
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“• Prior year minimum tax credit. See Form 8801.”
This chapter discusses how to pay your tax as you earn or receive income during the year. In general, the federal income tax is a pay-as-you-go tax. There are two ways to pay as you go.
• Withholding. If you are an employee, your employer probably withholds income tax from your pay. Tax may also be withheld from certain other income, such as pensions, bonuses, commissions, and gambling winnings. The amount withheld is paid to the IRS in your name.
• Estimated tax. If you don’t pay your tax through withholding, or don’t pay enough tax that way, you may have to pay estimated tax. People who are in business for themselves will generally have to pay their tax this way. Also, you may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rent, and royalties. Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well.
This chapter explains these methods. In addition, it also explains the following.
• Credit for withholding and estimated tax. When you file your 2025 income tax return, take credit for all the income tax withheld from your salary, wages, pensions, etc., and for the estimated tax you paid for 2025. Also take credit for any excess social security or railroad retirement tax withheld. See Pub. 505.
• Underpayment penalty. If you didn’t pay enough tax during the year, either through withholding or by making estimated tax payments, you may have to pay a penalty.
In most cases, the IRS can figure this penalty for you. See Underpayment Penalty for 2025 at the end of this chapter.
Useful Items You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) W-4 Employee’s Withholding Certificate W-4P Withholding Certificate for Periodic Pension or Annuity Payments W-4S Request for Federal Income Tax Withholding From Sick Pay W-4V Voluntary Withholding Request 1040-ES Estimated Tax for Individuals 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F Underpayment of Estimated Tax by Farmers and Fishers 505 W-4 W-4P W-4S W-4V 1040-ES 2210 2210-F
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