When it comes to managing your finances, it is crucial to stay on top of your tax obligations. The second-quarter estimated tax deadline for 2024 is June 17, and failure to send a payment could result in penalties imposed by the IRS. This deadline is particularly important for individuals who have income sources without withholdings, such as contract jobs, freelancing, or gig economy work. It is also relevant for those who run small businesses. However, it is essential to understand that quarterly estimated tax payments are not limited to the self-employed or small business owners.
According to certified financial planner Kelly Renner, there are instances where individuals may need to make quarterly payments after receiving a large distribution from a pretax individual retirement account or significant profits from selling an asset. It is important to note that you must make quarterly estimated tax payments if you expect to have at least $1,000 in tax liability on your 2024 return. The deadlines for estimated tax payments in 2024 are April 15, June 17, Sept. 16, and Jan. 15, 2025.
One way to avoid penalties for missed estimated tax payments is by meeting the “safe harbor rules” established by the IRS. This involves paying at least 90% of the current year’s tax liability or 100% of the previous year’s taxes, whichever is smaller. However, the threshold increases to 110% if your adjusted gross income from 2023 was $150,000 or higher. It is crucial to find your adjusted gross income on line 11 of Form 1040 from your 2023 tax return. While meeting the safe harbor rules protects you from penalties, it is still possible to owe taxes for 2024 if you earn more than in 2023 and do not make higher estimated payments.
Working with Tax Professionals for Proper Planning
If you anticipate rapid income growth in 2024, it is advisable to work with a tax professional to develop a proper tax plan and projection. This proactive approach can help you avoid unexpected tax liabilities and ensure compliance with IRS regulations. The fastest and most secure way to make estimated tax payments is online through platforms like IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS). These online systems offer convenience and efficiency for taxpayers. It is also recommended that every taxpayer should have an account with IRS.gov to facilitate payments and reconcile transactions seamlessly.
Making On-Time Payments
For those who prefer to mail payments, experts suggest using certified mail with a return receipt to provide proof of an on-time payment. This added precaution can help ensure that your payment is received and processed promptly. By staying organized and proactive in managing your estimated tax payments, you can avoid unnecessary penalties and maintain compliance with tax regulations. Remember, staying informed and taking the necessary steps to meet tax deadlines is essential for financial stability and peace of mind.