Estimated Payments with Emily Lantz

Ready to delve into a topic that often induces groans and sighs: estimated payments.

Understanding estimated payments is crucial for staying on the right side of the IRS and avoiding underpayment penalties and interest charges.

What exactly are estimated payments? 

Well, they’re payments you make throughout the year – typically in April, June, October, and January – to chip away at your tax liability for the upcoming year.

The money you’re paying in April 2024 is actually going towards what you owe for 2024. It’s like paying for next year’s groceries in advance – a bit strange, but necessary to keep everything running smoothly.

Nobody likes parting ways with their hard-earned cash, especially when it’s going straight to the government. But here’s the thing: failing to make these estimated payments can land you in hot water with the IRS. Uncle Sam doesn’t take kindly to taxpayers who try to skirt around their responsibilities.

So, why bother with estimated payments? 

Well, it all comes down to the IRS Safe Harbor requirements. Essentially, if you want to avoid underpayment penalties and interest charges, you need to meet these requirements. One way to do that is by staying up to date with your estimated payments. Of course, if you prefer, you can also satisfy these requirements by having taxes withheld from your paychecks—but that’s a topic for another day.

Now, I understand that this topic can be a bit confusing, and you might have some burning questions. But don’t worry, we’re here to help. If you’re struggling to understand how estimated payments work or wondering if you’re required to make them, please don’t hesitate to reach out to our office. We’re more than happy to assist you in unraveling the mysteries of the tax code and ensuring you’re on the right track.

Remember, there are only two certainties in life: death and taxes, and we do taxes.