If that’s the case, tax software can walk you through the process. TurboTax’s Premium plan, for example, can help self-employed filers search for industry-specific deductions and correctly fill out the right information. And if you need help from a tax expert, you can upgrade to the Live Assisted option and get unlimited tax advice.
If you make significantly more compared to the prior year, you might need to adjust your payments to avoid underpaying and incurring penalties. Now that you’ve read this article, you’ll know what happens if you miss a quarterly estimated tax payment — and what you can do about it. You can make your quarterly tax payments based on the $75,000, and you won’t be penalized for it. But you will need to pay tax for the extra $25,000 as a lump sum on April 15. Dealing with your quarterly payments by yourself might seem overwhelming.
Tax Time Guide: Escape penalties and interest with electronic payment options on IRS.gov
Learn more about failure to file penalties and underpayment penalties. Or use IRS Form 2210 to calculate any penalties or request a waiver. » Submitting an estimated tax payment with your tax extension request? If you can’t pay the full amount of your taxes on time, pay what you can now and apply for a payment plan.
If you decide to choose this option, you won’t owe a penalty at tax time as long as your calculations were correct. You’ll still owe the tax due but not yet paid when you file your tax return. estimated tax If your adjusted gross income (AGI) exceeds $150,000, you’ll need to pay 110% of the tax on your prior year’s tax return, rather than the 100% shown in the list above, to avoid a penalty.
Why you should change your withholding or make estimated tax payments
You could make payments once every two weeks or once a month if it makes it easier for you. In this case, pay as much as you can today and make another payment as soon as you can afford to pay more. Most people don’t fall under the household employers, farmers and fisherman or nonresident alien classifications. For more tips and resources, check out the Get Ready and Estimated Tax FAQs pages on IRS.gov. Knowing the right forms and documents to claim each credit and deduction is daunting.