Don't forget: if you pay estimated #taxes, your third quarter payment is due today, Sept. 15.*
Our tax system is pay-as-you-earn. That's typically done by an employer withholding from an employee's wages. But when there's no per-paycheck tax collection system in place, say for business owners paying themselves, the payment responsibility falls on the person getting the money. And the way it's done is through estimated tax payments.
The type of earnings that typically require estimated tax payments includes full-time self-employment or occasional gig work income, investment earnings, rental income, certain alimony payments, prize winnings, gambling proceeds, and, in some cases, retirement benefits, including Social Security.
When you expect you'll owe $1,000 or more at filing time, you should make estimated tax payments to avoid possible penalties and interest for not paying on time, which is quarterly as determined by the IRS.
Third of four payments: The Internal Revenue Service prefers you estimate how much money you'll get in the tax year that isn't subject to withholding, figure the tax bill that will generate, then pay it in four equal installments.
While they're referred to as quarterly, you'll not from the table below that the IRS uses its own calendar.
|Payment||Due Date*||For income received in|
|1||April 15+||Jan. 1 through March 31|
|2||June 15+||April 1 through May 31|
|3||Sept. 15||June 1 through Aug. 31|
|4||Jan. 15 of next year||Sept. 1 through Dec. 31|
*If the 15th is on weekend or federal holiday, the estimated payment is due the next business day.
The equal payment method also tends to be easier for estimated tax owing filers, too. But you do have different estimated tax payment options.
If you need help estimating or making your tax payment, let us know by contacting us.
The IRS provides plenty of information to help you as well.
The IRS issued an estimated tax Sept. 15 deadline reminder. It includes plenty of official IRS links if you want even more information on figuring and paying estimated taxes.
Finally, you might want to check out the IRS' video on the subject.
That's the unfortunate case for taxpayers now dealing with California wildfires and the Iowa derecho. They have until Dec. 15 to make their third estimated tax payment.
A similar delay has been granted to those who were in Hurricane Laura's path. Their third-quarter estimate tax filing isn't due until Dec. 31.
For guidance on CARES Act tax matters, please contact Lee Schmidt or other members of the A. L. Schmidt CPA Tax Practice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances