The Internal Revenue Service (IRS) is giving everyone a heads-up that the tax payment deadline is looming this month.
If you’re one of those folks whose income isn’t subject to withholding, your second quarter tax estimates are due by June 17. It’s essential to stay on top of your taxes and pay as you earn throughout the year. This means making estimated tax payments or having your employer withhold taxes from your paycheck.
Employers typically deduct income tax from your pay and send that amount to the IRS. If your income tax doesn’t cover all bases, you might need to pay an estimated tax amount. This often happens if you have additional sources of income like dividends or interest that aren’t taxed initially.
Those not subject to withholding include self-employed individuals, retirees, investors, businesses, corporations, and companies. These groups need to make estimated tax payments quarterly, with each quarter having a different payment due date. The payment for the second quarter, falling on June 17, mirrors the first quarter due date.
How Should I Pay My Taxes?
The IRS recommends electronic payments as the fastest and most convenient method for paying estimated taxes. You can use your IRS Direct Pay account to pay through your checking or savings account. Other options include digital wallets or credit/debit cards, bearing in mind there might be fees for card payments.
Another route is the Electronic Federal Tax Payment System, or you can pay by check, money order, or even a taxpayer’s check to the United States Treasury.
What Happens If I Miss the Deadline?
Missing the estimated tax payment deadline could lead to penalties. To avoid this, make sure you pay your estimated or withheld taxes regularly throughout the year to keep your annual return under $1,000. For 2024, the IRS suggests paying “at least 90 percent” of your due tax on that year’s return, or a minimum 100% of the previous year’s tax.
There are exemptions from underpayment penalties for certain taxpayers, like farmers, fishermen, high-income earners, disaster survivors, the disabled, retirees, and those with irregular income.