The EIN and IRS forms · A term for founders abroad
What is estimated tax?
Advance payments of US income tax made during the year by a corporation, or an individual with US-taxable income, once the tax passes a threshold.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 32 of 105 in the glossary, filed under E.IRS: instructions for Form 1120
Estimated tax, for a founder abroad.
The US collects income tax through the year rather than all at the end. A corporation expecting to owe $500 or more pays it in four instalments, due on the 15th of the fourth, sixth, ninth and twelfth months of its year: 15 April, 15 June, 15 September and 15 December for a calendar year.
A foreign-owned LLC with no US tax makes no estimated payments, while a profitable C-Corporation does. Paying too little in an instalment costs a penalty, even if the full tax is paid with the return.
Sources: IRS: instructions for Form 1120.
Read next · guide · 3 minThe tax and filing calendar for a foreign-owned US companyWhat founders ask next.
- Does my foreign-owned LLC pay estimated tax?
- Not if it has no US income tax, which is usual for a single-member LLC run from abroad.
- Does a new Delaware corporation pay estimated tax?
- Only once it expects to owe $500 or more in federal tax for the year.
03 · See also
- The EIN and IRS formsForm 1120The US corporate income tax return, filed yearly by a C-Corporation and, as a pro forma version, by a foreign-owned single-member LLC.Read the term
- The company itselfC-CorporationA US corporation taxed on its own profit, which issues stock and is what US investors' paperwork assumes; usually formed in Delaware.Read the term
- The EIN and IRS formsEINThe nine-digit tax number the IRS assigns to a business, and the first thing every US bank, payment processor and marketplace asks for.Read the term
- The EIN and IRS formsSSNThe US personal tax and benefits number for citizens and people authorised to work; not something a founder abroad has or needs to own a US company.Read the term
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