Welcome to Extreme Investor Network, your one-stop resource for all things personal finance. Today, we’re diving into the topic of quarterly estimated tax payments for the second quarter of 2024.
The IRS has set the deadline for June 17, and it’s crucial to make a payment to avoid penalties. While many people associate estimated tax payments with self-employed individuals or small business owners, the reality is that anyone with income not subject to withholdings should be making these payments.
For example, if you’ve received a large distribution from a pretax individual retirement account or made a significant profit from selling an asset, you may need to make quarterly estimated tax payments. The key threshold is having at least $1,000 in tax liability on your 2024 return.
To avoid penalties for missing these payments, it’s important to meet the “safe harbor rules” set by the IRS. This means paying at least 90% of the current year’s tax liability or 100% of last year’s taxes, whichever is smaller. If your adjusted gross income from 2023 was $150,000 or higher, the threshold increases to 110%.
While meeting the safe harbor rules can protect you from penalties, it’s essential to plan ahead if you expect rapid income growth in 2024. Working with a tax professional to create a proper tax plan and projection can help you avoid any surprises when tax time rolls around.
Making quarterly estimated tax payments is now easier than ever with online options like IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS). These platforms provide a secure and fast way to make payments and track your transactions. If you prefer to mail payments, using certified mail with a return receipt can provide proof of a timely payment.
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