Taxpayers have only one day to file pay-as-you-go taxes with the Internal Revenue Service (IRS), with the filing deadline set for June 17.
Earlier this week, the government agency issued a reminder to all taxpayers whose income is not subject to withholding.
Taxes must be paid as income is earned or received throughout the year, either through employer withholding or estimated tax payments, also known as pay-as-you-go taxes. When an employee is paid, their employer withholds a portion of their paycheck for income tax, which is then submitted to the IRS.
However, if the tax withheld from your salary or pension is insufficient, or if you have income from sources such as interest, dividends, alimony, self-employment, capital gains, prizes, and awards, you may be required to pay quarterly estimated tax payments to the IRS.
The self-employed, retirees, investors, businesses, and corporations are some of the groups who are non-withholding taxpayers. Estimated taxes are due each quarter of the year, with each payment having a specific due date, with the June 17 deadline being for the second quarter of 2024.
If you are not sure how much you might owe or whether you are currently paying the correct amount, the IRS advises referring to Form 1040-ES, Estimated Tax for Individuals or using its Tax Withholding Estimator tool.
But if you’re all set and ready, there are several ways to pay, with the IRS saying the most secure, fastest, and easiest method for making estimated tax payments is through an electronic payment. Taxpayers can use their online account or IRS Direct Pay to make payments directly from their checking or savings account.
Taxpayers also have the option to pay using a credit or debit card, or through a digital wallet—but payment processors may charge fees for these types of transactions. The Electronic Federal Tax Payment System (EFTPS) is another option for those making estimated payments.
If you do not wish to pay online, you can send a check or money order made payable to the “United States Treasury.”
If you do not pay enough tax by the designated date for each payment period, you may have to pay a penalty. To avoid having to pay a fine, taxpayers should ensure they pay most of their taxes throughout the year, either through withholding or estimated taxes, so that they owe less than $1,000 when filing their annual return, the government agency advises.
Newsweek has contacted the IRS via email to clarify what the failure to pay penalties are for estimated tax payments.
For 2024, the IRS specifies that taxpayers should pay “at least 90 percent of the tax owed on their 2024 return, or at a minimum 100 percent of the tax shown on their 2023 tax return.”
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.