There are two separate things you might be talking about:I know penalty& Interest would apply if you end up with a tax liability at the time of filing. But would it apply if you pay the tax liability before
end of year?
For example- I am estimating a 20K tax bill for TY 2024. I haven't made quarterly tax payment but if I pay the full 20K by Dec 2024, will interest and penalty still be assessed because I didn't pay the 20K eventually across 4 quarters in 2024?
I have the same questions regarding NJ state tax
1. You need to have paid all your tax liability by the tax filing deadline (April 15), not by the time of filing. (You can file first and then pay later, as long as it is before the tax filing deadline.) If you don't, you owe back taxes and interest, and maybe penalties.
2. You need to have paid an adequate amount of withholding and quarterly estimated taxes to meet the safe harbor level (90% of this year's tax or 100% (110% for high earners) of last year's tax, whichever is less), or else you will owe an underpayment penalty. If you meet this with withholding, it doesn't matter when the withholding was paid. But if the withholding is insufficient to meet the safe harbor level, you need to meet the difference with estimated tax payments, and these need to be paid sufficiently each quarter by that quarter's estimated tax deadline (April 15, June 15, September 15, and January 15). Generally, the amount that needs to be paid each quarter is 1/4 of the difference between withholding and the safe harbor level, so paying it by the end of the year is generally *not* enough to avoid an underpayment penalty. But in cases where your income increased in later quarters, it is possible to use the annualized income method to reduce the required estimated tax for earlier quarters.
Statistics: Posted by newacct — Fri Aug 16, 2024 8:24 pm — Replies 5 — Views 396