The Fine Print - Land O Lakes CPA

The U.S. system is “pay as you go.” If you expect to owe at least $1,000 when you file (after subtracting your withholding and refundable credits), you generally need to make estimated tax payments during the year unless your withholding covers enough. Otherwise, an underpayment penalty can apply.

Land O' Lakes CPA | Lutz Accounting | Odessa CPA | Tax Preparation Wesley Chapel

This is the IRS’s rule for individuals under the estimated tax law and penalty rules Estimated taxes and Underpayment of estimated tax by individuals penalty. However, you won’t be penalized if you meet a safe harbor: You owe less than $1,000 with your return, or You paid in (through withholding and/or estimated payments) at least: 90% of this year’s tax, or 100% of last year’s tax (110% if income requires it).

If you do need estimates, the usual due dates are April 15, June 15, September 15, and January 15 of the following year. Missing a due date or not paying enough for a quarter can trigger a penalty for that period, even if you get a refund at filing time. The penalty is figured like interest for the time the underpayment existed

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