Because you only file your taxes once a year, you may not completely know your tax liability until your tax return is complete. However, that’s not the point at which you pay your taxes. You are required, by law, to pay estimated taxes throughout the year.
How Do I Pay Estimated Tax?
For most people, paying estimated taxes is easy because an employer does it for them. The taxes that are withheld from your paycheck are your estimated tax payments. So, if those deductions are taken via payroll, you’re all set!
If you are self-employed or receive income that is not subject to withholdings, however, you are still responsible for paying your estimated taxes throughout the year. You need to make quarterly tax payments to the IRS (and any state or local authorities as well) in order to satisfy your tax liability.
When Do I Need to Pay?
The IRS requires that you pay estimated tax in either one sum by the end of the first quarter, or that you pay it in four installments throughout the year.
Estimated taxes are typically due in April, June, September, and January. You can visit IRS.gov to find out due dates for the current year as well as information regarding methods of payment.
What Happens If I Don’t Pay My Estimated Tax?
If you fail to make your quarterly tax payments, you can still pay your taxes when you file your annual return. However, you will most likely be assessed a penalty based on how much time has passed since your various quarterly payments were due.
For help getting your estimated tax payments in order, call Price Advantage Accounting today! We are your local tax experts in Orlando and we will be happy to help answer all of your estimated tax questions.