Federal Tax Alert: Estimated Tax Payments Due on June 16th
Breaking Down Estimated Tax Payments
Hey there! Here's the low down on estimated tax payments. The Internal Revenue Service (IRS) is reminding taxpayers that the second quarter deadline for these payments is fast approaching - Monday, June 16.
Who's your tax man knocking at? If you're a self-employed individual, freelancer, business owner, investor, or rental property owner, chances are you're on the IRS's radar. Even if you're earning through gig work or freelance services, and your income is being paid out via platforms that issue a Form 1099-K, you're still in the hot seat.
But fear not! Taxpayers are typically only required to make estimated payments if they expect to owe $1,000 or more in taxes for the year or if corporations expect to owe $500 or more. Of course, precise details can be found in IRS Publication 542 for corporations.
Pay Up!
The IRS urges taxpayers to go digital with their payments, as electronic transactions are the quickest and safest methods. Here's a brief rundown of the available options:
- IRS Online Account: Access your account and make your payment like a boss.
- Direct Pay: Pay using your savings or checking account, no sweat.
- Credit/debit cards or digital wallets: You got the plastic, pay the taxes. Keep in mind, fees may apply.
- The Electronic Federal Tax Payment System (EFTPS): Another digital option for paying your dues.
- The IRS2Go mobile app: Get it done on the go, hassle-free.
- Snail Mail: If you prefer good old-fashioned mail, send a check or money order along with Form 1040-ES, addressed to "United States Treasury."
Corporations are bound by regulations to use electronic funds transfer - primarily EFTPS - for all federal tax deposits, including estimated tax payments.
Exceptions to the Rule
Don't worry if all your income is from W-2 wages and your employer withholds enough tax. If you had no tax liability last year or if you qualify for one of the IRS safe harbor rules, there's no need to make estimated payments.
Just remember, it's important to stay on top of these payments to avoid falling behind on taxes and potentially incurring underpayment penalties. Happy taxing!
Enlightenment Corner:- Self-employed individuals, freelancers, investors, rental property owners, and corporations are among the most commonly affected by the requirement for estimated tax payments.- Exceptions include taxpayers whose income is entirely from W-2 wages with sufficient withholding, those with no tax liability the previous year, or those who qualify for IRS safe harbor rules.
To ensure timely payments for your business finances, consider using electronic methods such as the IRS Online Account, Direct Pay, credit/debit cards or digital wallets, EFTPS, the IRS2Go mobile app, or mailing a check or money order with Form 1040-ES.
Freelancers, self-employed individuals, investors, rental property owners, and corporations are expected to make estimated tax payments unless their income is wholly from W-2 wages, their previous tax liability was nil, or they meet the IRS safe harbor rules.
