What You should Know about Estimated Payments

The federal income tax system is designed in a manner where tax payers are required to pay tax during the course of the year rather than wait until the last date in the financial year, i.e. April 15^th. Self-employed individuals are required to make estimated tax payments throughout the year. Failure to do so can lead to a hefty penalty. Those who earn an income from rent, awards, interest, prizes, or alimony are also required to make estimated tax payments and tax lawyers know all about that.

So if you are Whitey Bulger, a former Irish gangster in Boston, all that money you were making in the 70s and the 80s you were supposed to report for tax purposes. Well, the FBI finally confiscated your final pile of cash in Southern California. Perhaps that can help pay a little for your incarceration, or all of it.  

Self-employed individuals are also required to pay self-employment tax in addition to regular income tax. Estimated tax payments need to be paid quarterly. You can use the IRS worksheets to calculate the quarterly payments which need to be made after deducting credits and any current withholding. The requirements for estimated tax payments vary for individuals, sole proprietors, LLCs, and corporations. You ought to check with the IRS depending on your status, recommend tax attorneys. 

If you need tax legal help, you need to go right here: Tax.USAttorneys. If you think Whitey Bulger lasted a long time on the run from the law, this website will last a lot longer than that and this website is not on the run from any person or anything, in the real or the virtual world. This website has helped thousands of people find the legal help they needed when they needed it.

Include Regular Income Tax and Self-Employment Tax

Self-employed individuals are required to use Form 1040-ES for estimated tax calculations. It is advisable to take into account any changes in your current status and the existing tax laws as well, when calculating estimated tax payments.

The IRS worksheet includes a schedule with tax rates to help with your estimation. Tax rates change according to specific income levels therefore you need to be pay attention to the instructions when calculating your dues. Apart from regular income tax, you will need to include self-employment tax as well.

According to tax lawyers, 92.35% of your income is subject to estimated tax payments, excluding self-employment tax. If the total estimated tax payment due is over $1,000, you need divide the amount by four and make quarterly payments according to the schedule set by the IRS. Payment dates vary, however, the first payment is usually due in mid-April, with subsequent payments in mid-June, mid-September, and mid-January.

In case of any fluctuation in income during the year, amendments can be made to the remaining estimated payments. This ensures you to pay the appropriate amount rather than end up overpaying. Since the tax is to be paid regularly, it is sagacious to set aside the required amount as soon as you receive in order to avoid further complications.

The Advantages of Quarterly Installments

Paying in quarterly installments is more practical since having to set aside a huge amount at the end of the year may be difficult. It requires a fantastic deal of self-discipline to put aside enough for taxes, and doing so in smaller sums is always easier. Moreover, payments can be adjusted without any hassles. Most states have similar rules on estimated tax payments. However, you will need to check with your state tax department. Underpayments do no attract a hefty penalty if they are corrected within a short period or if the amount is small.

Estimated tax payments are to be made by using Form 1040-ES or the Electronic Federal Tax Payment System. Any overpayments from the previous year can be applied to the next year. Those paying federal estimated tax may be required to pay state estimated tax as well.

If you have any problems with the Internal Revenue Service (IRS) or simply need help with your payroll taxes, estimated tax payments, or any other liability with the IRS, all you need is to contact a tax lawyer. A legal representative will help you find a stellar solution, or the best solution possible, to your tax issues. Don’t go the Whitey Bulger way!