- ORIGINAL NEWS
IRS: Taxpayers may avoid a surprise tax bill by making a quarterly payment by Jan. 16
- SUMMARY
The IRS requires certain individuals and businesses to make estimated tax payments during the year instead of waiting until tax season.
The deadline for one of these estimated tax payments is January 16, 2023.
Taxpayers may owe an extra fee or penalty if they fail to make this payment.
Freelancers, small business owners, investment income earners, and gig economy workers are among those who could be required to pay taxes on a quarterly basis.
When filing your tax return in 2024, making quarterly payments enables you to prevent paying a larger amount on April 15th.
To avoid penalties, follow the “safe harbor” regulations.
Pay either 90% of the current year’s tax liability or 100% of the previous year’s taxes, whichever is smaller (adjusted gross income of $150,000 or more requires 90% of current year or 110% of last year’s taxes).
Electronic payments to the IRS can be made through options like IRS DirectPay or Electronic Filing Tax Payment System (EFTPS).
Sending in a check by certified mail with a return receipt can help prove payment if needed.
Keep in mind that late payments may result in a penalty of 0.5% of the unpaid balance per month or 25% in total plus interest.
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“The fourth-quarter estimated tax deadline is Jan. 16, and you could have a surprise bill or owe a penalty if you don’t send a payment.”
“If you miss the estimated tax payment deadline, you may trigger a late penalty of 0.5% of your unpaid balance per month or partial month, up to 25%, plus interest, which is currently 8%.”