I have to pay ?

Estimated Tax Payments

Estimated tax payments are kind of like eating your vegetables.  They come around way too often and taste a little bitter going down. After you’ve gotten used to paying them though, you’ll probably be glad you did.

The US Income tax system is a “pay as you go” system.  For the majority of us, our employers help us out by withholding a calculated amount of money that they send to the Treasury on our behalf to account for the tax we are incurring on our earnings. If we get it right, we don’t owe much or will have a small refund.  If we get it wrong, there can be a big swing either way.  I don’t love big refunds because that means you let the government borrow your money interest free.  Nobody loves a big balance due, for all the reasons, and if it’s over $1000 the IRS will charge you interest and penalties on the amount you owe.

If withholdings aren’t covering your tax bill each year, then you want to start calculating an amount to pay as an estimated payment.  You can pay a random amount, a percentage or last year’s tax bill, or start dialing it in to figure out your actual tax bill. This can be challenging, with lots of factors to take into account.  This is an included service for my quarterly and full service clients where we look at their income so far, and calculate an estimate based on their personal and business situations. 

Estimates are due April 15, June 15, September 15, January 15 (following year).  Note those are NOT even quarters, and some states have different quarterly due dates and amounts due as well.