If you would like to get started on doing your income tax for AirBnb activity, start here.
Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.
Both of these conditions must apply for you to make estimated tax payments:
1. You expect to owe at least $1,000 in tax for 2020 after subtracting your withholding and refundable credits.
2. You expect your withholding plus your refundable credits to be less than the smaller of: • 90% of the tax to be shown on your 2020 tax return, or • 100% of the tax shown on your 2019 tax return. Your 2019 tax return must cover all 12 months.