If you earn regular wages as a full- or part-time employee of a company, your taxes are withheld from your paychecks throughout the year. If you aren’t working in a position that offers withholdings—for instance, if you operate as an independent contractor or if you’re self-employed—you could go months without paying anything to the IRS. Why is this a problem? For a start, you might discover that you owe a huge amount when tax season rolls around, and it can be difficult to pay your tax balance in one lump sum. But that’s not the only reason to file estimated quarterly tax payments throughout the calendar year.
The IRS can actually impose an underpayment penalty when taxes aren’t paid regularly. Paying estimated taxes a few times a year will help you avoid owing even more, due to this penalty being added to your total. But estimated taxes are just that: they’re calculated based on your best guess as to how much you’ll bring in by the end of the year. If your income fluctuates wildly from year to year, you might be anxious about coming up with a realistic number for your quarterly tax payments. Luckily, Taxation Solutions, Inc. can help. Among our other tax services, we can assist individual taxpayers with calculating and filing estimated taxes. We can also resolve penalties for underpayment. Call us today if you live in Charlotte and need professional tax help!