The third-quarter estimated tax deadline for 2024 is quickly approaching on Monday, Sept. 16, and it’s crucial not to skip this payment to avoid potential penalties from the IRS.
At Extreme Investor Network, we understand the importance of staying on top of your estimated tax payments to prevent any surprises come tax season. Whether you have income without tax withholdings, earnings from self-employment, or investment income, making estimated payments can help you avoid any “refund disappointment or balance due shock,” as stated by Mark Steber, chief tax information officer at Jackson Hewitt.
If you’re unsure if you need to make estimated tax payments, the IRS has provided a “general rule of thumb” to determine if you should make a payment. In general, you should make estimated tax payments if you expect to owe at least $1,000 in taxes after subtracting your 2024 withholdings and tax credits, or if you can’t meet the safe harbor rules outlined by the IRS.
Speaking of safe harbor rules, you can avoid IRS penalties by paying at least 90% of your 2024 tax liability or 100% of your 2023 taxes, whichever is smaller. It’s important to meet these thresholds throughout the year to prevent any penalties.
At Extreme Investor Network, we also want to highlight the “timing penalty” that many taxpayers overlook. Even if you’re within the safe harbor limits, you can still incur a penalty for missing quarterly estimated tax deadlines. The quarterly deadlines for 2024 are April 15, June 17, Sept. 16, and Jan. 15, 2025, and missing these deadlines can result in an interest-based penalty calculated based on the amount that should have been paid and the current interest rate.
For taxpayers impacted by natural disasters in certain states, Puerto Rico, and the Virgin Islands, the IRS may provide extra time for third-quarter estimated payments depending on their location.
To make tax payments easier, consider setting up automatic payments or using the IRS Direct Pay system. This can help ensure that you never miss a deadline and avoid any penalties.
Stay informed and prepared when it comes to your estimated tax payments by staying connected with Extreme Investor Network for the latest updates and tips on personal finance. Making timely and accurate estimated tax payments can help you avoid penalties and financial stress down the road.