Taxpayers who are worried they didn’t pay enough in income taxes during 2021 have some good news.
They can avoid a big surprise tax bill and potential penalties and fees by making a quarterly estimated tax payment, according the Internal Revenue Service.
Taxpayers have until Jan. 18 to make payments for 2021’s fourth quarter.
Self-employed taxpayers and investors are most likely to make estimated tax payments since they can’t have income taxes, Social Security benefits or other government payments withheld from their paychecks through a traditional employer.
“If a taxpayer failed to make required quarterly estimated tax payments earlier in the year, making a payment soon to cover these missed payments will usually lessen and may even eliminate any possible penalty,” the IRS said in a news release. “Because the penalty calculation considers the date on which the payment or payments were made, even making a payment now, rather than waiting until the April filing deadline, often helps.”
But not everyone needs to make these payments. And that may be confusing for business owners or independent contractors worried about penalties or fines.
“Estimated tax payments are one of the biggest concerns I hear from new clients,” Peek says. “They want to know when they are due and how much they have to owe.”
For more on what estimated tax payments are, how to pay them and who pays them, read this Peez ConsultiN blog.
If you’re still unsure whether you need to make an estimated tax payment or how much you need to pay, please reach out to Amy Peek, owner of Peekz ConsultiN, and make an appointment.
PHOTO CREDIT: GotCredit/Flickr-CC
Peekz ConsultiN LLC is a Pittsburgh-based accounting firm, located in the West Side, that caters to individuals, small businesses and nonprofit organizations. We aim to empower clients to help them take control of their finances and achieve their dreams.