Deadline Alert: Don’t Miss the Jan. 16 Estimated Tax Payment Due Date!

**Deadline Alert: Don’t Miss the Jan. 16 Estimated Tax Payment Due Date!**

The fourth-quarter estimated tax deadline is Jan. 16, and you could have a surprise bill or owe a penalty if you don’t send a payment, according to the IRS. While many employers withhold levies from every paycheck, other income — such as freelancing, small business or investment earnings — requires a separate payment to the IRS. Generally, you must make quarterly estimated payments for this income if you expect 2023 tax liability of $1,000 or more. In December, the IRS reminded such taxpayers to make a fourth-quarter tax payment on or before Jan. 16 “to avoid a possible penalty or tax bill when filing in 2024.”

**What to know about the ‘safe harbor’ rules**

Filers can avoid an underpayment penalty by following the “safe harbor” guidelines, according to Mark Steber, chief tax information officer at Jackson Hewitt. You meet the requirements by paying at least 90% of the current year’s tax liability or 100% of last year’s taxes, whichever is smaller. But if your 2022 adjusted gross income was $150,000 or more, you need to pay the lesser of 90% of the current year’s tax liability or 110% of last year’s taxes to meet the safe harbor requirement for 2023.

**How to make quarterly estimated tax payments**

With limited time until the deadline, “the fastest and easiest” option for remitting funds to the IRS is via electronic payments, according to the agency. Here are your options: If you pay by sending a check in the mail, Wheelwright recommends sending it via certified mail with a return receipt because you may “have to prove that you made it on time.”

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By making those payments, you avoid having to pay the IRS even more on April 15. If you miss the estimated tax payment deadline, you may trigger a late penalty of 0.5% of your unpaid balance per month or partial month, up to 25%, plus interest, which is currently 8%.

**What to know about the IRS’ “safe harbor” rules**

The “safe harbor” rules for making estimated tax payments are crucial to understand to avoid underpayment penalties. It’s possible to meet the requirements by paying at least 90% of the current year’s tax liability or 100% of last year’s taxes, whichever is smaller. However, if your 2022 adjusted gross income was $150,000 or more, you’ll need to pay the lesser of 90% of the current year’s tax liability or 110% of last year’s taxes to meet the safe harbor requirement for 2023.

**Secure and Efficient Methods for Making Tax Payments**

When it comes to remitting funds to the IRS for quarterly estimated tax payments, electronic payments are hailed as the fastest and easiest option. For those choosing to pay by sending a check in the mail, it is recommended to do so via certified mail with a return receipt to have proof of the timely submission.

In conclusion, ensuring compliance with quarterly estimated tax payments is essential to avoid penalties and unexpected tax bills. By understanding the “safe harbor” rules and leveraging efficient payment methods, taxpayers can navigate the upcoming deadline with confidence and financial prudence.

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