Optima Tax Aid Reminds Self-Employed Taxpayers of Estimated Tax Fee Deadlines

As a self-employed particular person or a taxpayer with important further earnings, it’s essential to remain on high of your tax obligations, together with quarterly estimated tax funds. On this article, Optima Tax Aid opinions the significance of assembly estimated tax fee deadlines to keep away from potential penalties and curiosity.  

For people who do not need taxes withheld from their earnings, resembling self-employed people, freelancers, or these with substantial funding earnings, the IRS requires quarterly estimated tax funds. The IRS requires taxes to be paid on earnings as it’s earned. These funds are designed to cowl your tax legal responsibility all year long and stop a big tax burden at year-end.  

In 2023, the deadlines for paying estimated tax funds are: 

  • April 18, 2023, for earnings earned between January 1 to March 31 
  • June 15, 2023, for earnings earned between April 1 to Might 31 
  • September 15, 2023, for earnings earned between June 1 to August 31 
  • January 16, 2024, for earnings earned between September 1 to December 31 

Though these deadlines are outlined every quarter, taxpayers might pay all their 2023 estimated taxes by April 18, 2023, to keep away from any extra funds the remainder of the 12 months. Moreover, they’ll pay your entire tax stability due in the event that they file their tax return by January 31, 2024, moderately than making their remaining fee by the January 16 deadline. Taxpayers ought to word that these deadlines solely apply for the quarters by which earnings is earned and taxes are owed.  

To calculate your estimated tax fee, you should use the IRS Type 1040-ES or seek the advice of a tax skilled. The calculation takes into consideration your anticipated complete earnings for the 12 months, deductions, credit, and any taxes withheld. It’s essential to estimate your earnings as precisely as attainable to keep away from underpayment penalties. There are a number of strategies out there for submitting your quarterly estimated tax fee. You may make a fee electronically utilizing the IRS’s Digital Federal Tax Fee System (EFTPS), Direct Pay, or the IRS2Go app. Alternatively, you possibly can mail a test or cash order to the suitable IRS tackle.  

Failing to make quarterly estimated tax funds or underpaying your taxes can lead to penalties and curiosity costs. The IRS calculates the underpayment penalty primarily based on the quantity owed and the length of the underpayment. By assembly the quarterly deadlines and making correct funds, you possibly can keep away from these penalties. It’s vital to plan for future funds and regulate your estimates if mandatory. Usually overview your earnings, bills, and deductions to make sure your estimated tax funds align together with your monetary state of affairs. 

Navigating estimated tax funds may be complicated, particularly you probably have a number of earnings sources or important adjustments in your monetary circumstances. Consulting with a tax skilled or accountant can present beneficial insights, serving to you precisely calculate and handle your estimated tax funds.