Everything you must know about the Quarterly taxes!

San Jose, CA, 11th April 2022, ZEXPRWIRE, Every year, the IRS comes up with a tax calendar with specified dates for Estimated quarterly filings. Estimated tax is a tax payment made four times a year based on the filer’s reported income for the quarter. The COVID-19 pandemic messed up the federal income tax calendar for 2020 and 2021. The IRS extended various tax filing and quarterly tax dates to give taxpayers more time to complete their obligations during both years.

What is the Estimated quarterly tax payment?

• Taxes can be estimated for any taxable income that isn’t subject to withholding. Earned income, dividend income, rental income, interest income, and capital gains are all examples.
• People with income (not subject to automatic withholding) must file quarterly estimated tax payments with the Internal Revenue Service (IRS). The taxpayer then files the usual tax paperwork for the entire year, pays the balance due, and either requests reimbursement or pays the balance owing.
• Small business owners, freelancers, and independent contractors are the most likely to be required to pay taxes quarterly. They do not have taxes deducted from their paychecks in the same way that regular employees do.
• Quarterly taxes (also known as estimated taxes) are how self-employed people must pay their taxes to the IRS throughout the year if their earnings exceed a certain threshold. So, depending on your self-employed income, you may have not one but four “Tax Days”/’quarterly tax dates’ throughout the year.

Who should make quarterly estimated tax payments?

According to the IRS, you must pay estimated quarterly taxes if you expect to:

• Even after refundable credits (such as the earned income tax), you’ll owe at least $1,000 in federal income taxes this year. This year, your withholding and refundable credits will be less than 90% of your tax liability.

Or,

100% of your liability last year, whichever is smaller. (If your adjusted gross income was more than $150,000 for married couples filing jointly or $75,000 for singles the previous year, the threshold is 110 percent.)

• Quarterly taxes (also known as estimated taxes) are how self-employed people must pay their taxes to the IRS throughout the year if their earnings exceed a certain threshold. So, depending on your self-employed income, you may have not one but four “Tax Days”/’quarterly tax dates’ throughout the year.
• Investors and landlords. Even if employers withhold taxes from paychecks, investments may need to pay estimated quarterly taxes.
• Employed people have taxes deducted from their paychecks by their employers based on the W-4 forms they fill out. Others must pay the government directly in the form of an estimated tax rather than waiting for filing their annual tax return.
• Self-employed individuals, contractors, investors who receive dividend income and generate capital gains, bondholders who receive interest income, writers who receive royalties on their work, and landlords who accept rental payments.

• Employed people have taxes deducted from their paychecks by their employers based on the W-4 forms they fill out. Others must pay the government directly in the form of an estimated tax rather than waiting until the end of the year to pay when filing their annual tax return.

• Taxable unemployment compensation, retirement benefits, and any other income subject to estimated tax are examples of income that is subject to estimated tax.

• Interest and penalties are assessed against the delinquent amount if the estimated taxes paid do not equal at least 90% of the taxpayer’s actual tax liability (or 100% or 110 percent of the taxpayer’s prior-year liability, depending on the level of adjusted gross income).
• If an individual’s net earnings are less than $400, no tax is due. If their net earnings exceed $400, they must pay an estimated tax on the entire amount. Individuals who earn less than $400 must still file a tax return if they meet specific eligibility requirements.

When are the quarterly taxes paid?

Estimated taxes are usually paid every three months. The first quarter comprises three months on the calendar: (from January 1 to March 31). The second “quarter” only lasts two months (April 1 to May 31). The third section covers the next three months (June 1 to August 31), and the fourth section covers the last four months of the year.

These quarterly tax dates stand due on April 15, June 15, and September 15 of each year and January 15 of the following year.

What if you owe more than you can afford to pay?

Many people are facing financial difficulties this year due to the pandemic, job loss, and other factors. If you’re one of them, you might not be able to meet the deadline to pay your tax bill. No matter when you file, the IRS begins charging penalties and interest on the day the return is due.

However, don’t put off filing your tax return because you can’t afford to pay the total amount due on the due date. By filing on the quarterly tax dates, spending as much as you can when you file, and set up an installment plan for the balance, you can reduce the penalties for failure to file.

What if you missed the deadline?

• If you don’t pay enough tax throughout the year, the IRS will levy penalties.
• If you meet the following criteria, the IRS may grant you a penalty waiver:
• You were a victim of a tragedy, natural disaster, another unusual event, or
• You’re at least 62 years old, retired, or disabled this year or last year, and the reason for your underpayment was “reasonable cause” rather than “willful neglect.”

The bottom line:

Hopefully, this guide has helped you make your tax filing process easy. Depending on the type of work you do or how you’re paid, you may have to pay your tax bill in quarterly instalments. So, for those who need a little extra help remembering when to file a return, submit a report, or pay a tax, we’ve compiled a list of the most important quarterly tax dates in 2022. Every month has at least one deadline, so pay attention. We don’t want you to deal with the Internal Revenue Service.

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