Estimated Quarterly Taxes In 2023: What You Need To Know
An Overview of Estimated Quarterly Tax Payments
Each year, taxpayers are required to pay taxes on the income they earned during the year. For most people, this means paying taxes in April when they file their taxes. But for some taxpayers, the amount of taxes they owe can be too much to pay all at once. To help with this, the IRS allows taxpayers to make estimated quarterly tax payments throughout the year. These estimated tax payments are based on the taxpayer’s estimated tax liability for the year. By making these payments throughout the year, the taxpayer can avoid an unexpected tax bill when they file their taxes.
Who Needs to Make Estimated Quarterly Tax Payments?
Not everyone needs to make estimated quarterly tax payments. Generally, the IRS requires taxpayers to make estimated payments if they expect to owe more than $1,000 when they file their taxes. This requirement applies to individuals, corporations, and self-employed individuals. For example, if you are self-employed and expect to owe more than $1,000 in taxes when you file your taxes, you will need to make estimated tax payments each quarter.
When Do You Need to Make Estimated Quarterly Tax Payments?
The estimated quarterly tax payments are due on the 15th day of the fourth, sixth, ninth, and twelfth months of the year. For example, if you are required to make estimated tax payments, the payments for the first quarter of the year will be due on April 15. The second quarter payment will be due on June 15, and so on.
How Much Should You Pay?
The amount you will need to pay in estimated taxes will depend on your estimated tax liability for the year. The best way to calculate your estimated tax liability is to use the IRS’s Estimated Tax Worksheet. This worksheet will help you calculate your estimated tax liability for the year and determine how much you need to pay in estimated taxes each quarter.
What Happens If You Don't Make Estimated Quarterly Tax Payments?
If you don’t make your estimated quarterly tax payments, the IRS will charge you a penalty. This penalty is calculated based on the amount of taxes owed and the amount of time the taxes are overdue. The penalty for not making estimated tax payments is generally much higher than the penalty for filing late. Therefore, it’s important to make your estimated quarterly tax payments on time each quarter.
How to Make Estimated Quarterly Tax Payments
You can make your estimated quarterly tax payments in several ways. The most common way to make these payments is to use the IRS’s Direct Pay system. This system allows you to make your payments directly from your bank account. You can also make estimated quarterly tax payments using a credit card, but you will likely be charged a processing fee. You can also make payments using a check or money order.
Can You Get a Refund If You Overpay?
If you make estimated tax payments that are more than your actual tax liability for the year, you will receive a refund for the amount you overpaid. The refund will be sent to you in the form of a check or direct deposit. You can also use the IRS’s Where’s My Refund tool to check the status of your refund.
Conclusion
Estimated quarterly tax payments can be an important part of ensuring you don’t owe an unexpected tax bill when you file your taxes. It’s important to calculate your estimated tax liability for the year and make your payments on time each quarter. If you don’t make your payments on time, you may be subject to a penalty. Additionally, if you overpay, you can receive a refund for the amount you overpaid.
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