Tax Tip – To Avoid Tax Penalties
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Betty Legg
Fabulous Tax & Accounting
Tax Tip –
Quarterly Tax Estimates and Why They’re Necessary
Are you one of the many Americans who dread tax time? The good news is that there are ways to reduce the stress of filing your taxes. One way to make the process a little bit easier is to understand quarterly estimates and why they are necessary. In this blog post, we will discuss what quarterly estimates are and how they can help you avoid penalties from the IRS.
1. Quarterly Estimates – What They Are and Why You Need To File Them
Quarterly estimates are simply an estimate of what you expect your tax liability to be for the year. They are due on April 15, June 15, September 15, and January 15 of the following year. Filing quarterly estimates can help you avoid penalties from the IRS.
2. What Happens If You Don’t File Quarterly Estimates
There are a few reasons why it is important to file quarterly estimates. First, if you do not file an estimate, the IRS will charge a late payment penalty. Second, if you underestimate your tax liability, you may end up owing the IRS money when you file.
3. How To File Quarterly Estimates
The best way to file quarterly estimates is through a licensed tax preparer. Quarterly estimates are filed federally using form 1040-ES. Using a professional tax preparer ensures that you are accurately calculating them and submitting them correctly and on time. Here at Fabulous Tax and Accounting, we can help you calculate your estimated taxes and submit them electronically for you.
When it comes to filing taxes, it is important to understand all of the requirements in order to avoid penalties. Filing quarterly estimates is one way to help make the process a little bit easier.
4. Penalties For Not Filing On Time
If you do not file an estimate, the IRS will charge you a late payment penalty. The late payment penalty is usually 0.05% of your unpaid taxes for each month or part of a month that the tax is late. The maximum amount of the penalty is 25%.
5. Common Mistakes People Make When Filing Quarterly Estimates
One of the most common mistakes people make when filing quarterly estimates is underestimating their tax liability. This can lead to penalties from the IRS when you file your taxes.
Filing quarterly estimates can help reduce stress during tax season and can help you avoid penalties from the IRS. If you are unsure of how to file them, contact a licensed tax preparer for assistance. Fabulous Tax and Accounting is here to help!
For more information and help with filing your quarterly estimates and any other tax needs, please contact us at Fabulous Tax and Accounting. We would be happy to help!
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