A majority of individuals work for an employer who withholds the necessary tax implications from their check each pay period. At times an individual may elect to have their employer keep additional money out of their check in order to cover their tax requirement necessitated by other means, such as alimony, interests, dividends, or capital gains.
Opposite these individuals are those who work for themselves, partners in a business or members of an S corporation. This group of people typically need to make estimated tax payments to the United States Treasury in order to ensure they receive no penalties at the end of the year when organizing their personal tax preparation.
Just as individuals earn money throughout the year, the United States government expects to receive their share in a timely manner. In an effort to avoid catching up all at once during the normal filing period and submitting required monies at one point, most commonly the April 15 deadline, taxes can, should and may be required for submission during the year.
The IRS essentially computes an individual’s estimated earnings for the entire tax year and divides the amount into four equal payments made throughout the calendar year. Those paying estimated taxes
then make a payment complete with a voucher for each quarter. The payment schedule is typically as follows.
1st Quarter - April 15
2nd Quarter - June 15
3rd Quarter - September 15
4th Quarter - January 15
If you have income subject to tax but not withheld the IRS provides a form to assist in computing your estimated taxes. The Form 1040-ES
is available online providing step by step instructions for specific calculation. While accessible the computations and specific requirements in order to assure proper payments are made and received requires professional assistance. You do not want to avoid estimated tax payments believing a one-time lump sum can be made to “catch up” with the IRS at the end of the year. If incorrect or late, penalties may be levied.
Not only will the penalties be enforced for payments not received during the year but interest may also be attributed depending on when the non-tax assessed income was received. For example, if you win money and forget about the tax implication, profits may be spent prior to settling with the IRS at the end of the year. If the sum was won in June, the estimated tax payment should be made in September - NOT the following April. Interest could be assessed for the lapsed time period if not properly handled.
Come see the experts at Bloch, Rothman, and Associates
who can help you determine your specific tax implications and if estimated payments apply to you. They will decide which deduction method is best and answer any other questions regarding individual or business income taxes while assisting with a variety of bookkeeping options. A full detailed review of your tax situation can be completed in addition to resolution issues and estate compilations. All services, including free of charge E-filing options will be completed in a timely manner, depending on your restrictions and possible tax deadlines. Whether you need a simple explanation on a random tax form or are in need of a variety of other services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us
for a free, no obligation consultation.