16 Apr Missed an estimated tax payment?
If you missed a quarterly estimated tax payment, here are some steps you can take:
Make the Payment as Soon as Possible: Even if it’s late, making it as soon as possible will help reduce any potential penalties and interest. The IRS may charge a penalty for underpayment of estimated taxes, which is calculated based on the amount of the underpayment, the period it was due, and the interest rate
Calculate Penalties and Interest: The IRS imposes penalties and interest on late payments. The penalty is typically 0.5% of the unpaid amount for each month or part of a month that the payment is late, up to a maximum of 25%. Interest is calculated based on the federal short-term interest rate plus 3%, compounded daily.
Adjust Future Payments: If you missed a payment, you might need to adjust your remaining estimated payments to cover the shortfall. This can help minimize penalties. You can use IRS Form 1040-ES to calculate and adjust your future payments
File Your Tax Return on Time: When you file your annual tax return, you can report the missed payment and any penalties. Filing on time can help avoid additional penalties.
Consider Setting Up a Payment Plan: If you’re unable to pay the full amount, you can contact the IRS to set up a payment plan. This can help you manage your tax liability over time.
Review Your Withholding: If you have a regular job or have set up optional withholding on clergy income, you might want to adjust your withholding to cover your tax liability more accurately. This can help prevent underpayment in the future.
Original content by clergyfinancial.com. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.