Some, but not all, taxpayers need to make estimated tax payments. The IRS has a “pay as you go” system. This means the IRS requires taxes to be paid either through withholding or estimated tax payments as you earn income, not just at the end of the year when you file a tax return. Estimates are usually necessary when a taxpayer does not have enough withholding form their salary or retirement income. In addition, taxpayers that receive other types of income such as interest, dividends, business income, capital gains, prizes, etc. may be required to make estimated tax payments.
The consequence of not paying estimated taxes timely and in the required amount is that you may be assessed a penalty. The IRS charges a penalty if your estimated payments are late or not in the required amount.
Estimated tax payments are usually required for individuals, partners, and S corporation shareholders if they expect to owe more than $1,000 of tax when their return is filed.
Corporations must make estimated tax payments if their tax due on their tax return will be $500 or more.
We can help you calculate your estimates and help you avoid any penalties that result from late payment or underpayment of your estimated tax. This penalty is easy to avoid so keep the money in your pocket and do not give it to the IRS.
For more information on the services available to you by Heard, McElroy
& Vestal, LLC, call our Shreveport office at (318) 429-1525, our
Monroe office at (318) 388-3108 or visit www.hmvcpa.com.
Author: Malia Wollerson, Tax Department