As you are all very well aware of, individuals must pay 25% of a “required annual payment” by April 15, June 15, September 15, and January 15 of the following year, to avoid an underpayment penalty.
So the third quarter estimated tax payments for 2022 is due on Wednesday, September 15.
The required annual payment for most individuals is the lower of 90% of the tax shown on the current year’s return or 100% of the tax shown on the return for the previous year. However, if the adjusted gross income on your previous year’s return was more than $150,000 ($75,000 if you’re married filing separately), you must pay the lower of 90% of the tax shown on the current year’s return or 110% of the tax shown on the return for the previous year.
Due to the current financial, market fluctuation and many other factors, you may not rely on the safe harbor method (based on 2021 tax liabilities) estimates. It is a critical time to find out where you stand with your 2022 tax liabilities and revisit your tax strategies for the year.
Moreover, now that the Inflation Reduction Act has been passed, we should understand its various tax implications and consider the timing of tax planning.
If you need a taxable income projection for your Q3 payment and the rest of the year, please contact us immediately.