What does withholding and credit mean?

Derionnaaa — Tue, 24 Feb 2026 07:04:11 GMT

I saw a post that asked about paying these quarterly taxes. In the reply someone said you must pay quarterly if you make $1000 after withholdings and credits (paraphasing). What does this means and how do I determine my withholding and credits?

Re: What does withholding and credit mean?

KochuK — Wed, 30 Aug 2023 17:37:00 GMT

Hi Derionnaaa, thanks for posting an event question.

In a nutshell, the formula of Form 1040 is as follows:

determine your taxable income > tax liability (the total amount of income tax owed from taxable income > reduced by what you have paid in from withholding, such as the amount already paid to IRS from your employment paycheck by your employer > reduced by various credit allowed by tax rules, such as dependent credit (if you have dependent), various education credits (if you are in college and eligible) etc. > deriding a final number - balance due or a refund.

Through estimation such as TurboTax Tax Castor tool,

https://turbotax.intuit.com/tax-tools/

generally, you must make estimated tax payments for the current tax year if both of the following apply:

You expect to owe at least $1,000 in tax for the current tax year after subtracting your withholding and refundable credits.
You expect your withholding and refundable credits to be less than the smaller of:
- 90% of the tax to be shown on your current year’s tax return, or
- 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.

Estimated Tax FAQs

https://www.irs.gov/faqs/estimated-tax

Hope the above helps.

Thank you,

Kitty

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What does withholding and credit mean?

Re: What does withholding and credit mean?