Tag Archive for: Estimated tax payments

Important Estimated Tax Payment Deadlines for Q4

As we are fully immersed in the holiday spirit, we want to make sure that you stay on top of your tax deadlines affecting your businesses as well as your personal taxes.

Here are the key deadlines we would like to remind you of:

December 15, 2022

If a calendar-year C corporation, pay the fourth installment of 2022 estimated income taxes.

For calendar-year S corporation, pay the fourth installment of 2022 California Franchise Tax Board estimated tax payment.

December 31, 2022

Establish a retirement plan for 2022 (generally other than a SIMPLE, a Safe-Harbor 401(k) or a SEP).

January 16, 2023

If you’re self-employed or have other income without any tax withholding, and you make quarterly estimated tax payments, this is the due date for your final quarterly payment for the 2022 tax year.

As our year-end is typically very hectic helping clients with their year-end tax planning and strategies, please reach out to us as soon as possible if you would like us to do the following:

  • Provide the payment vouchers using the safe harbor method, or
  • Need a projection to come up with more accurate payment amounts due if the 2022 tax year income is significantly different from 2021 (either up or down)

For our business clients, we have already reached out to them and reminded of the Pass-Through Entity Tax (PTET) if applicable. You still have time to take an advantage from it, so please reach out to us.

Encore is here to help you with more information about the filing requirements to ensure you’re meeting all applicable deadlines.

2022 Q3 Estimated payment due by 9/15

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.

Don’t Miss Q2 Estimated Payment Deadline – June 15

Hope you all are excited about summer and how things are slowly getting back to normal, or maybe “new normal.”

As we always want our clients to stay ahead with their taxes, this is an important reminder that the Q2 estimated payment due date is right around the corner (June 15th).

As you know very well, the US tax system operates on a “pay-as-you-go” basis. If you earn money that isn’t subject to withholding from an employer, you will have to pay taxes every quarter on those earnings.

This can include earnings from the sale of an investment, rental income, dividends, interest, and self-employment income.

Even if you are withholding taxes from your paycheck, you might have to pay quarterly taxes if your withholdings don’t cover enough.

We can project your taxable income and related estimated income tax liability for the second quarter based on information you provide to us. In addition to the income tax projection, we can provide you with a summary of tax planning strategies that may reduce your 2021 tax liability.

Tax compliance and tax strategies are certainly not for tax filing season only and this is why Team Encore stays busy all year round.

Let’s stay proactive about your tax planning and complete your tax projections for the second quarter.

Cheers!

Income tax deadline is extended, but estimated tax payment is still due on April 15

As you have already heard, due to the COVID-19 pandemic, the federal government extended this year’s federal income tax filing deadline from April 15, 2021, to May 17, 2021. This extension is automatic and applies to filing and payments. The Franchise Tax Board (FTB) also announced that, consistent with the Internal Revenue Service, it has postponed the state tax filing and payment deadline for individual taxpayers to May 17, 2021 and most of other states have extended income tax filing and payment deadlines to May 17 as well.

However, please be reminded that the estimated tax payments are still due on April 15 and the IRS has not extended the due date for estimated income tax payments.  The same is for FTB and the postponement only applies to individual taxpayers, and it does not apply to estimated tax payments, which are still due on April 15.

Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. If you receive the income that isn’t subject to income tax withholdings such as self-employment income, interest, dividends, alimony or rental income, you must make estimated tax payments to the IRS quarterly.

We are always here to help. If you haven’t done so yet, please reach out to us today.

Estimated tax payments: The deadline for the first 2021 installment is coming up

April 15 is not only the deadline for filing your 2020 tax return, it’s also the deadline for the first quarterly estimated tax payment for 2021, if you’re required to make one.

You may have to make estimated tax payments if you receive interest, dividends, alimony, self-employment income, capital gains, prize money or other income. If you don’t pay enough tax during the year through withholding and estimated payments, you may be liable for a tax penalty on top of the tax that’s ultimately due.

Four due dates

Individuals must pay 25% of their “required annual payment” by April 15, June 15, September 15, and January 15 of the following year, to avoid an underpayment penalty. If one of those dates falls on a weekend or holiday, the payment is due on the next business day.

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 (more than $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.

Most people who receive the bulk of their income in the form of wages satisfy these payment requirements through the tax withheld by their employers from their paychecks. Those who make estimated tax payments generally do so in four installments. After determining the required annual payment, they divide that number by four and make four equal payments by the due dates.

The annualized method

But you may be able to use the annualized income method to make smaller payments. This method is useful to people whose income flow isn’t uniform over the year, perhaps because they’re involved in a seasonal business.

If you fail to make the required payments, you may be subject to a penalty. However, the underpayment penalty doesn’t apply to you:

  • If the total tax shown on your return is less than $1,000 after subtracting withholding tax paid;
  • If you had no tax liability for the preceding year, you were a U.S. citizen or resident for that entire year, and that year was 12 months;
  • For the fourth (Jan. 15) installment, if you file your return by that January 31 and pay your tax in full; or
  • If you’re a farmer or fisherman and pay your entire estimated tax by January 15, or pay your entire estimated tax and file your tax return by March 1

In addition, the IRS may waive the penalty if the failure was due to casualty, disaster, or other unusual circumstances and it would be inequitable to impose it. The penalty may also be waived for reasonable cause during the first two years after you retire (after reaching age 62) or become disabled.

Stay on track

Contact us if you have questions about how to calculate estimated tax payments. We can help you stay on track so you aren’t liable for underpayment penalties.