Learn How To Make Estimated Tax Payment

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As accounting professionals with tax expertise we are here to help. With burdensome and complicated Internal Revenue Service (IRS) requirements regarding estimated tax payment for individual and small business.

Who has to Pay Estimated Federal Income Taxes?

As we’re sure you know, most employees (probably yours) have appropriate federal income taxes withheld from every paycheck and don’t need to worry about estimated tax payments. But almost all sole proprietors, partners, S corporation shareholders and LLC owners must pay estimated taxes. 

Four Growth-Killing Small Business Accounting Problems and Solutions

When are my Estimated Tax Payments Due?

Your payments are due in four installments. For the 2019 tax year they are (were):

  • April 15, 2019. Yes, this is the same day your 2018 final tax return was due. Even if you filed for an automatic extension to October 15, 2019 your 2019 estimated tax payment was still due. (Hopefully, you have already made this payment.)
  • June 17, 2019. (Hopefully, you have already made this payment.)
  • September 16, 2019. This deadline is coming up faster than you think!
  • January 15, 2020. This gives us just two weeks to determine your 2019 estimated tax payment, but recall that this is an estimated payment, so if you can’t give us everything we need to make an exact calculation we can determine an estimated payment that will allow you to avoid any penalties. 

Challenges and solution in tax preparation. Read more.

Then comes April 15, 2020 when all the money you owe – if any – is due. We say “if any” because our goal as your tax accountants would be to make sure you have paid the correct amounts in the four estimated tax payments we calculated for you, you should pay a very small amount or even get a small refund. We actually want you refund to be small if at all, because if you overpaid you essentially loaned money to the government interest free. Also note that even if you instruct us to apply for the automatic extension to October 15, 2020 for the final return filing, any payment that is due to the IRS is due on April 15, 2020. 

Important Tax Elections To Help Reduce Your Tax

But it never stops, does it? April 15, 2020 is also the due date for your first estimated tax payment for 2020!  Note that estimated tax payment due dates for the 2020 tax year are not officially set, but they will most certainly be April 15, 2020, June 15, 2020, September 15, 2020 and January 15, 2021. 

What if I can’t Make a Payment?

What if I absolutely can’t make my quarterly estimated tax payment to the IRS on time? The good news is you won’t go to jail! The bad news is that in most cases you pay interest and penalties. Penalties vary annually but are generally around five percent and interest also varies but is actually reasonable – far less than the typical credit card rate. Also, if you miss the exact due date for an estimated tax payment you don’t have to wait until the next due date to catch up. Paying as soon as possible can help minimize you interest cost. For example, you are unable to make your September 16, 2019 payment but a huge account receivable check arrives on September 20; go ahead and make the payment and get caught up. 

Every business needs a CPA, learn why?

What you really want to avoid is finding yourself behind on your 2019 estimated tax payments on April 15, 2020 and simultaneously behind on your first 2020 estimated tax payment. Get a live person quick at IRS by doing this. 

Are there ways to Avoid any Penalties?

Yes, there are several. Even if the estimated taxes paid were too low, (using 2019 as an example) if you paid the IRS 90% of what was ultimately determined to be due or if you paid the IRS and amount equal to 100% of the taxes that you owed for 2018 you are safe. Also, there are waivers for events such as casualties, disasters, or retirements. We can walk you through your options.

Thinking about selling your business? Learn how to save tax.

As a final note, any applicable state and local income taxes generally require quarterly estimated tax payments, but, since these taxes are calculated based on your federal returns, as tax accounting experts we can prepare these payments as well. 

Do you have unique issues or concerns not discussed in this blog? Then please contact us by email or phone. We are here to help.

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AKIF CPA
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Annie Phillips
Annie Phillips
12:35 10 Oct 21
Turn around time was amazing on the project I needed done. When you don’t understand all the different forms... communication is key and you will get that here. They are there to explain what and why you need it.read more
Meru Kapadia
Meru Kapadia
23:33 01 Oct 21
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Kevan Shah
Kevan Shah
21:45 01 Oct 21
I’ve been going to them for 3 years now for multiple of my businesses. I changed to them after I had problems with my... previous CPA firm and I’m so glad I did! Best decision I ever made for my businesses. They have saved me thousands of dollars over the years as well as deal with my immensely complicated tax filling issues. No matter when I call, they always help answer all my questions (and trust me I have a lot) and put my mind at ease on all my concerns. I feel as if I am family the way they take care of me. The quality of their work has not changed; very consistent and professional. It is an understatement when I say I highly recommend them.read more
Maunil Shah
Maunil Shah
16:19 01 Oct 21
AKIF CPA is the best place for your tax needs! Saim has been easily available for my all my questions and concerns. ... Couldn’t ask for a better firm that provides excellent service and a familiarity with their clients. I always recommend family and friends to AKIF CPA!!read more
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Shah Hussain
03:58 01 Oct 21
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Sumit Dalwadi
Sumit Dalwadi
04:57 30 Sep 21
The professionals at Akif have been absolutely amazing! Quick to answer all the questions I had and always available... to offer their guidance.read more
Calvin R
Calvin R
20:21 29 Sep 21
I recommend these guys! I will be going back next year. They made everything simple and we understood what was... happening. There we issues with our taxes due to our previous accountant and these guys fixed everything. They answered our questions and service was always with a smile.read more
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Ammoria Daniels
02:11 16 Sep 21
We contacted Akif with an urgent matter regarding corporate taxes. Akif immediately understood what was needed and... within days had everything ready to sign. The level of service we received was amazing and unmatched. Waqar expertise in trucking industry made our situation seamless. His communication was outstanding; I heard from him daily and could have been completed sooner if I was as fast as he was 😃 Highly recommended!read more
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What an absolute pleasure to work with this CPA firm. My business is already seeing such a positive impact and growth.... I cannot believe I didn't connect with them sooner. This firm is helping in so many ways! 5 stars is an understatement! Thank you so much for your help AKIF CPAread more
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22:14 02 Jun 21
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Tuan Vo
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