what is the penalty for not paying quarterly tax?

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Peppergrass
Posts: 49
Joined: Tue Mar 27, 2018 7:25 pm

what is the penalty for not paying quarterly tax?

Post by Peppergrass » Tue Jul 31, 2018 11:08 pm

Hi guys,

I wondered, as I read there is a fine or fee if you don't pay quarterly federal tax estimates...

what exactly is the fine or fee?



thanks

AlohaJoe
Posts: 5081
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: what is the penalty for not paying quarterly tax?

Post by AlohaJoe » Tue Jul 31, 2018 11:12 pm

I typed "what is the penalty for not paying quarterly taxes" into Google and found the answer pretty easily. Have you tried searching?

BrainDrain
Posts: 25
Joined: Thu Mar 26, 2015 2:28 am

Re: what is the penalty for not paying quarterly tax?

Post by BrainDrain » Wed Aug 01, 2018 12:46 am

It’s 5 percent annual interest of the amount owed if you settle up by normal tax filing date. It would usually end up being less than 5 percent of the amount owed because it’s based on making equal payments April 15, June 15, Sept 15, and Jan 15 (2019). Interest is determined from each of those dates.

You may fall into one the safe harbors based upon your previous year’s tax bill. This could result in your not owing interest at all if you have paid 100-110 percent (depending on income) of your tax bill from the previous year in equal, on time estimated tax payments and/or wage/retirement distributions with tax withholdings.

The interest rate is not high, but it’s one debt collector that won’t go away! :shock:

https://www.irs.gov/newsroom/interest-r ... r-of-2018/

MotoTrojan
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Re: what is the penalty for not paying quarterly tax?

Post by MotoTrojan » Wed Aug 01, 2018 12:50 am

Plenty of time to use extra withholding to get safe harbor or 90% of tax due withheld, assuming you have W2 income coming regularly.

Jablean
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Joined: Sat Jun 02, 2018 2:38 pm

Re: what is the penalty for not paying quarterly tax?

Post by Jablean » Wed Aug 01, 2018 12:56 am

I'm in 12% bracket and I put money in quarterly just usually not enough because of solo business income. I'm learning to track a little better based on variable income. Usually pay $50 to $85 in fee. Not a big deal to me.

CurlyDave
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Joined: Thu Jul 28, 2016 11:37 am

Re: what is the penalty for not paying quarterly tax?

Post by CurlyDave » Wed Aug 01, 2018 1:02 am

If you pay by the due date for the return (April 15) the penalty is set quarterly and is the federal funds rate plus 3%.

My portfolio returns are almost always higher than this, so I take the gamble and just don't send in any estimated taxes, but pay it all by April 15 of the year due.

Most years I make out pretty well, and have an accumulated surplus to take care of any future down years.

This is legal and Storm Troopers have never shown up at my door...

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gasdoc
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Re: what is the penalty for not paying quarterly tax?

Post by gasdoc » Wed Aug 01, 2018 8:34 am

I found it much easier to make equal payments based on last years taxes (my salary can vary greatly from month to month, so the quarterly estimates required waiting until the last moment to calculate.

gasdoc

Topic Author
Peppergrass
Posts: 49
Joined: Tue Mar 27, 2018 7:25 pm

Re: what is the penalty for not paying quarterly tax?

Post by Peppergrass » Wed Aug 01, 2018 3:54 pm

thanks Brain and others.

so obviously also no way to make more then they charge if you held it..


so someone is literally calculating each quarter amount owed, if you make a "wrong payment" as in underpayment they then calculate and adjust for each quarter.... my gosh some people are bored

I haven't paid as I run too many options each week to really track down what I would owe, I am just going to move to a percentage of earning and then send in payment.. call me lazy but sending in 4 payments, then having to talk back and forth with tax man sounds incredibly ridiculous..

thanks again guys

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