IRS Estimated Tax Payment Dates: Payment Options, Penalties, and Calculation

News: Individuals who work for themselves and do not have consistent tax deductions should stay mindful of the imminent deadlines for making estimated tax payments to the IRS. The upcoming payment due date is January 15, 2024, encompassing earnings from September 1 to December 31, 2023. Timely submission of payments is essential to prevent potential penalties and uphold a favorable status with the IRS.

Upcoming Deadlines for IRS Estimated Tax Payments

To help you plan your tax payments effectively, here are the upcoming deadlines for the different quarters:

First Quarter: Due April 15th, 2024

Self-employed individuals and those lacking regular tax withholding should be attentive to the approaching deadlines for IRS estimated tax payments. The next payment deadline is January 15, 2024, covering income earned from January 1 to March 31, 2024. Timely remittance of payments is vital to avoid potential penalties and to maintain a positive standing with the IRS.

Second Quarter: Due June 15th, 2024

For those without regular tax withholding and self-employed individuals, it is crucial to be proactive in planning for upcoming deadlines related to IRS estimated tax payments. The next payment deadline is January 15, 2024, encompassing income earned from April 1 to May 31, 2024. Proactive planning and strict adherence to these deadlines are essential for maximizing financial stability and preventing potential penalties from the IRS.

IRS Payment Schedule for Calendar Year Taxpayers

First Quarter:

The upcoming deadline for IRS estimated tax payments is April 15, 2024. This payment covers income earned from January 1 to March 31, 2024. Ensuring timely submission of payments is critical to avoid any penalties and maintain compliance with IRS regulations.

Second Quarter:

The upcoming deadline for IRS estimated tax payments is June 15, 2024. This payment covers income earned from April 1 to May 31, 2024. Timely adherence to this deadline is essential to prevent potential penalties and uphold compliance with IRS requirements.

Third Quarter:

The forthcoming deadline for IRS estimated tax payments is September 15, 2024. This payment covers income earned from June 1 to August 31, 2024. It is imperative to meet this deadline punctually to avoid potential penalties and maintain compliance with IRS regulations.

Fourth Quarter:

The impending deadline for IRS estimated tax payments is January 15, 2025, encompassing income earned from September 1 to December 31, 2024. If additional time for tax filing is needed, an automatic extension until October 15th can be obtained by electronically filing Form 4868. It’s crucial to be aware that while the filing deadline is extended, any taxes owed must still be paid by the original deadline of April 15th.

Alternative IRS Payment Options

1. Lump Sum Payment: You have the option to pay your entire estimated tax liability in one go by April 15th of the following year.

2. Weekend/Holiday Dates: If a due date falls on a weekend or federal holiday, your payment is still considered timely if made by the next business day.

3. Late Payments: Missed deadlines can result in underpayment penalties and interest charges, so it’s crucial to make your payments on time.

Safe Harbour Rule:

To avoid penalties, make sure your estimated tax payments total at least:

• 90% of your expected tax liability for the year.
• 100% of your prior year’s tax liability if your adjusted gross income for the prior year exceeded $150,000 for individuals or $300,000 for married couples filing jointly.

Special Cases

1. Farmers and Fishermen: If you derive at least two-thirds of your gross income from farming or fishing, you have a single estimated tax payment due on January 16th of the following year.

2. Fiscal Year Taxpayers: If your business operates on a fiscal year that isn’t the calendar year, your estimated tax payment deadlines will differ from the standard quarterly schedule. Consult IRS Publication 505, Tax Withholding and Estimated Tax, for specific due dates.

Calculating Your IRS Payments

To calculate your estimated tax payments, follow these steps:

1. Estimate your income for the year.
2. Subtract your estimated deductions and credits.
3. Multiply the remaining amount by your tax bracket.
4. Divide the result by four to get your quarterly estimated payment amount.

Alternatively, you can aim for 100% of your prior year’s tax bill for safe harbor.

How to Make IRS Tax Payments

There are several options available for making estimated tax payments to the IRS:

1. Electronic Federal Tax Payment System (EFTPS): This is the IRS’s preferred method for making estimated tax payments. You can make payments online or by phone.

2. Direct Pay: Schedule payments from your checking or savings account using Direct Pay.

3. Mail: Send a check or money order with a Form 1040-ES voucher to the IRS mailing address specified for your region.

4. Credit or Debit Card: Make payments using authorized credit or debit cards through Direct Pay or designated third-party processors.

Penalties for Late Filing IRS Tax

Late filing or failure to pay your taxes can result in penalties from the IRS. Here are the penalties to be aware of:

1. Failure to File Penalty: If you don’t file your tax return by the deadline, you will owe a penalty of 5% of your unpaid taxes for each month your return is late, up to a maximum of 25%.

2. Failure to Pay Penalty: If you owe taxes but don’t pay them by the deadline, you will owe a separate penalty of 0.5% of your unpaid balance for each month it’s late, up to a maximum of 25%.

It’s crucial for self-employed individuals and those without regular tax withholding to stay on top of their IRS estimated tax payments. Adhering to the deadlines, making accurate calculations, and choosing the right payment method can help you avoid penalties and maintain good standing with the IRS. Keep these guidelines in mind to ensure your financial stability and peace of mind.