IRS: Taxpayers may avoid a surprise tax bill by making a quarterly payment by Jan. 16
IRS: Taxpayers may avoid a surprise tax bill by making a quarterly payment by Jan. 16



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The fourth-quarter estimated tax deadline is Jan. 16, and you possibly can have a surprise bill or owe a penalty in the event you do not ship a payment, based on the IRS.

While many employers withhold levies from each paycheck, different earnings — corresponding to freelancing, small enterprise or funding earnings — requires a separate payment to the IRS.

Generally, it’s essential to make quarterly estimated funds for this earnings in the event you count on 2023 tax legal responsibility of $1,000 or extra.

In December, the IRS reminded such taxpayers to make a fourth-quarter tax payment on or earlier than Jan. 16 “to avoid a attainable penalty or tax bill when submitting in 2024.”

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“By making these funds, you avoid having to pay the IRS much more on April 15,” mentioned licensed public accountant Tom Wheelwright, CEO of WealthAbility.

If you miss the estimated tax payment deadline, you may set off a late penalty of 0.5% of your unpaid stability per thirty days or partial month, as much as 25%, plus curiosity, which is currently 8%.

What to know in regards to the ‘protected harbor’ guidelines

Filers can avoid an underpayment penalty by following the “protected harbor” tips, based on Mark Steber, chief tax data officer at Jackson Hewitt.

You meet the necessities by paying not less than 90% of the present yr’s tax legal responsibility or 100% of final yr’s taxes, whichever is smaller.

How to make quarterly estimated tax funds

With restricted time till the deadline, “the quickest and best” possibility for remitting funds to the IRS is by way of digital funds, based on the company. Here are your choices:

If you pay by sending a verify within the mail, Wheelwright recommends sending it by way of licensed mail with a return receipt since you may “need to show that you just made it on time.”

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