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The original poster should disregard the advice being given here because it is pretty bad. The IRS does assess penalty fees for failing to pay quarterly. The current IRS penalty fee is 3% based on the Fed interest rate. Money Markets currently pay well under 1% annually. Avoiding a 3% penalty beats earning <1%. Also, I am under the assumption that the 3% is applied annually. If quarterly, then the argument is even more lopsided.
If someone owes $20,000.00 in income taxes by April '16 and pays nothing during the course of the year, they would owe a minimum penalty fee of $600 ($150 per quarter) assuming the income was earned evenly quarter to quarter. If they invest the same $20,000.00 in a MM, they would earn less than $200. This also ignores that fact that the $20k is earned gradually during the course of the year. So the <1% interest is being earned on a much smaller amount than the $20,000.00.
Just To Clarify...
Thats wasnt what was said. It what I thought they were saying but I was not understanding what they were trying to explain. They were not saying you didnt have to pay.
If your quarterly payment is $1000, and you are late one payment, the IRS will not be assessing penalties.
You can mail it in late, or you can double up the next payment, and you will be fine.
No excuses but carelessness. Is there a penalty? How about if I pay them before Dec. 3
I'm not sure, I think there is a penalty unless you made a large amount more than last year. Carelessness is not an excuse either.
Luckily for me when I first started my business and it started to take off I didn't spend much because I wanted to be sure but I didn't pay quarterlies that year. I paid up (HUGE AMOUNT OF TAXES) but the next year my CPA estimated and I put money aside every month. When quarterlies were due I had the money and ouch it hurt and made me miserable and a cheap azz. I set it up so they were automatically paid since writing those tax checks made me an A1 B*TCH. I knew it was paid and being it was so much money I still was not happy but at least I didn't want to scream bloody ******* at anyone who looked my way.
Originally Posted by SouthernBelleInUtah View Post
No excuses but carelessness. Is there a penalty? How about if I pay them before Dec. 3
Wait until next year when you have to pay 1st quarter and 4th quarter but bills and payroll still roll in. Oh and don't forget about paying quarterly state taxes too.
FEDERAL QUARTERLIES DUE
2015 4th Qtr Taxes Due: January 15, 2016
2016 1st Qtr Taxes Due: April 15, 2016 2016 2nd Qtr Taxes Due: June 15, 2016 2016 3rd Qtr Taxes Due: September 15, 2016 2016 4th Qtr Taxes Due: January 15, 2017
STATE QUARTERLIES DUE
2015 4th Qtr Taxes Due: January 15, 2016
2016 1st Qtr Taxes Due: April 15, 2016 2016 2nd Qtr Taxes Due: June 15, 2016 2016 3rd Qtr Taxes Due: September 15, 2016 2016 4th Qtr Taxes Due: January 15, 2017
There are local taxes due too. If you are an employer make sure you are paying payroll taxes too.
Just To Clarify...
Thats wasnt what was said. It what I thought they were saying but I was not understanding what they were trying to explain. They were not saying you didnt have to pay.
I was replying to the original poster, not to you. The poster stated they failed to pay quarterly taxes and wanted to know if there was a penalty. Nobody else gave her a concrete answer, so I did.
I believe you mentioned putting the funds in a money market, and I pointed out why that is not wise. With current money market rates around .5%, in order to make $300-400 on the tax money, she would have to owe like 100k in taxes.
Last edited by Nolefan34; 12-15-2015 at 06:31 PM..
Hijacking for one question-- what happens if you overestimate? Do you get the overage back easily?
Yes--we overpaid estimated 2014--always file delayed because we need K1s for o/g income reporting and they come just day or so before the deadline...
We had large property sale and accountants said to estimate higher than they might be just to be sure of not paying penalty for underestimating---
We had to wait for refund of our overpayment (no interest when the govt owns you unfortunately) because my husband had to prove identity before they would process the refund check--
Still waiting--said might take 8 weeks--so guess that doesn't qualify as easily...
IRS doesn't move too fast to give money back I guess....
I was replying to the original poster, not to you. The poster stated they failed to pay quarterly taxes and wanted to know if there was a penalty. Nobody else gave her a concrete answer, so I did.
I believe you mentioned putting the funds in a money market, and I pointed out why that is not wise. With current money market rates around .5%, in order to make $300-400 on the tax money, she would have to owe like 100k in taxes.
A concrete answer cannot be given with the information provided. We don't know if OP owes less than 1k, or if OP qualifies under safe harbor rules to escape penalty.
All we can say is that yes, in general, you must make your quarterly estimates on time, and that the penalty if owed is not terribly severe.
A concrete answer cannot be given with the information provided. We don't know if OP owes less than 1k, or if OP qualifies under safe harbor rules to escape penalty.
All we can say is that yes, in general, you must make your quarterly estimates on time, and that the penalty if owed is not terribly severe.
First, the OP said she paid no quarterly taxes and wanted to know if their was a penalty. I gave her the answer. There is a 3% penalty rate. Nobody else mentioned that in the 5 pages of posts. You are correct about the $1000 exception, but if her total quarterly taxes are under $1000, then she's probably not paying any taxes anyway because her income is too low. She may even report a loss.
When you say the penalty is not severe, what exactly do you mean? I think owing an additional 3% on top of your taxes is pretty severe. That could be hundreds if not thousands of dollars of wasted money to the IRS.
Last edited by Nolefan34; 12-17-2015 at 06:46 PM..
First, the OP said she paid no quarterly taxes and wanted to know if their was a penalty.
But Petunia is right: "A concrete answer cannot be given with the information provided."
I took the OP's comment as she simply forgot about payment #3.
You took it as she paid nothing all along.
The OP has provided not clarification.
Every so often I don't bother making estimated taxes. As long as I don't get thrown into jail or the penalty (if there is one) is greater than I've earned on my investments, I don't care.
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