Q) Is an S corporation required to pay quarterly estimated tax?
A) An S corporation is not required to pay quarterly estimated tax unless it expects to owe $500 or more in tax for the year. If the S corporation does expect to owe $500 or more in tax, it must make estimated tax payments in four equal installments. The first installment is due on April 15th, the second installment is due on June 15th, the third installment is due on September 15th, and the fourth installment is due on January 15th.
The S corporation can use Form 1040-ES to calculate its estimated tax payments. The form is available on the IRS website.
If the S corporation does not make its estimated tax payments on time, it may be subject to a penalty. The penalty is equal to 0.5% of the amount of the underpayment for each month that the underpayment is outstanding. The maximum penalty is 25%.
The S corporation can avoid the penalty if it can show that it had reasonable cause for not making the payments on time.