Deciphering Your Quarterly Tax

Typically, most Americans have taxes withheld from their pay, pension, or social security payments. For those who do not do this are required to pay quarterly taxes. Just like everything else – if you do not pay on time, you will be penalized and end up paying more.

Four times a year, your estimated quarterly taxes are due unless you filed your taxes on April 18th and paid the full-year estimate. These dates are April 18th, June 15th, September 15th, January 16th, 2024. If you filed your 2023 tax return before January 31st, you do not have to make the January 16th payment if you pay the entire balance with your return. MSN.

So, who must pay these quarterly estimated taxes? Generally, it includes people who do random gigs, businesses, retired individuals, self-employed individuals, or even those who do not have taxes withheld on their paychecks. MSN. There are special rules for farmers and fishermen, certain household employers, higher-income taxpayers, and nonresident aliens; these individuals should consult IRS Publication 505, Tax Withholding and Estimated Tax which explains the two pay as you go federal income tax, withholding, and estimated tax. Otherwise, Form 1040-ES, Estimated Tax for Individuals is used to help you figure out and pay your estimated tax.

If something happens causing you to not be able to pay your taxes, whether accidental or purposeful, you will end up owing more. You can avoid this penalty if you owe less than $1,000, paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. MSN. Penalties can even be waived by the IRS if you were a victim of a disaster or at least 62, retired, or disabled this/last year and your underpayment is due to a reasonable cause – not willful neglect.

For any questions regarding taxes or how to best plan for these quarterly tax payments, reach out to the Professionals at The Center for Financial, Legal, & Tax Planning Inc. at (618) 997-3436.