As you’re rushing to file your 2016 taxes on time, it’s easy to forget some important details.
Detail #1 – You get three extra days to file this year. The weekend and holidays push the filing deadline from April 15 to April 18. Great news!
Detail #2 – and not-so-great news — The first quarterly estimated tax payments for 2017 are due by the same day. It’s a Double Whammy for some, but that’s the way it is.
The IRS and state tax agencies both expect their tax payments at least quarterly. Federal estimated payments are due April 15, June 15, September 15, and January 15 of the following year. Unless, like this year, the 15th falls on a weekend or a holiday.
Who Needs to Pay Tax Estimates?
If all your income comes from wages, chances are that your withholdings cover your income tax liability. If you are self-employed or receive other income, such as interest, dividends, capital gains, or rent, you probably need to make estimated income tax payments.
You must pay estimated tax for 2017 if you expect to owe at least $1,000 in tax after subtracting withholding and refundable credits. Withholdings or estimates must total the smaller of 90% of your 2017 tax liability, or 100% of your 2016 tax liability.
What if You Don’t Pay Enough?
Penalties are assessed if you do not make the required payments throughout the year, as income is received. Also, interest accrues daily on the underpaid amount. That can really add up.
Clearly, the IRS and other taxing agencies are serious about getting paid on time. Figure your 2017 federal income tax bill by using the IRS Withholding Calculator at http://1.usa.gov/18lMbRu. States and the District of Columbia also have online information about withholdings, estimates, and underpayment penalties.
When in doubt, or if you are not comfortable with DIY tax preparation, consult a qualified tax professional.