What does this mean and how do I respond to this: "How much of your 2016 estimated state taxes did you pay in 2017?"

[KiaraE · Accepted solution]

If you are an employee, your employer withholds taxes from every paycheck and sends the money to the IRS, and probably to your state government as well. This way you pay your income taxes as you go. And, if you're like most wage earners, you get a nice refund at tax time.

But if you are self-employed, or if you have income other than your salary, you may need to pay estimated taxes each quarter to square your tax bill with Uncle Sam. You may owe estimated taxes if you receive income that isn't subject to withholding, such as:

• Interest income
• Dividends
• Gains from sales of stock or other assets
• Earnings from a business
• Alimony

So if none of these apply, then you did not pay state pays in 2017 for the tax year 2016.