7 Suggestions to Keep in Mind When Paying Quarterly Estimated Taxes
Each year, hundreds of taxpayers neglect to pay fines and interest costs and file their IRS payments on time. This occurs due to their ignorance of the significance of IRS tax deadlines. If you fall within this category, this blog post is helpful as it offers advice on how to pay quarterly taxes while averting fines and interest properly.
This article explains in detail how to accomplish this. All of this straightforward tax advice will make it simple and easy for people to pay their taxes.
RECOGNIZE THE DUE DATES
Estimated Quarterly Taxes Are Due This Month!
Keeping track of the money you owe is crucial as tax season gets underway. However, it can also be very daunting and perplexing. But we are here to help.The deadlines for estimated taxes are listed below.
[H3]Estimated Quarterly Taxes are due on April 15 [H3]
Taxes must be filed for the fourth quarter of the previous year, which ends on December 31. Therefore, the optimum time to submit your taxes is on April 15 even though you can do so as early as January 1. You’ll be able to access all the information that way.
Estimated Quarterly Taxes are due on June 15
It’s crucial to file your taxes for the fifth quarter of the previous year by June 15 because that quarter ends on June 30. You will then be given a complete refund for the money you made in the final quarter of the previous year.
Taxes Are Due On September 15 for the Current Quarter
The last three months of the previous year are now. You must file your taxes by September 15 because the sixth quarter of the prior year ends on September 30. In this manner, you will be given a whole tax refund.
You can apply for a tax filing deadline if you miss the tax payment deadline.
LOOKING OVER BUSINESS DEDUCTIONS
Remembering to consider company deductions while paying quarterly estimated taxes is among the most crucial considerations.
Whether you are a sole proprietor, a self-employed person, or a business owner, it makes no difference. You must make quarterly anticipated tax payments if you own a business.
And as a result, you must deduct specific company expenses from your personal income before filing your income tax.
You should be able to write them off as long as you have done so correctly, but if you don’t, you risk incurring fines and interest for not having the necessary paperwork for your business deductions.
Because of this, you need to record your business expenses on your anticipated quarterly taxes and store them in a safe place.
The ideal location to accomplish this is in a personal notepad. However, you could instead create a file on your computer.
There are many deductions you can make. For example, if you’ve made any donations to Goodwill, you can take advantage of the Goodwill donation deduction. When you travel for business, the IRS allows you to deduct the per diem meals. The food and entertainment deduction is another option besides deducting business travel expenses, health insurance premiums and continuing education costs.
Think about retirement tax breaks
Make a plan for how you will save money for your retirement.
Investing in the stock market is the first approach to saving money. Because it is a surefire strategy to increase the value of our money, we should aim to buy as many stocks as possible.
If we do not have enough money to fund our retirement, we can benefit from tax reductions offered by the government and save money by investing in bonds. We must ask ourselves the questions, “Do I need this tax break?” and “Will it help me save money?”.
If we have enough money to fund our retirement, we should keep saving for other things like paying off debt, putting money toward our children’s education, and other things.
To avoid penalties, MAKE SAFE HARBOR PAYMENTS
The most crucial thing you can do to safeguard yourself is to make Safe Harbor Payments.
You might be entitled to make safe harbor contributions, for instance, if the income reported on your W2 Form exceeds your adjusted gross income.
You are safeguarded if you pay your anticipated taxes and submit an extension.
The IRS refers to any tax debt for which a taxpayer has made partial payment as a “Safe Harbor Payment.” Included are any income taxes deducted from paychecks and/or projected tax payments.
Safe Harbor Payments are credited to the taxpayer’s tax return for the following year.
You must wait to file after making the safe harbor payment until there is no outstanding tax due (and the statute of limitations has expired).
Payments for Safe Harbor Taxes made after the filing deadline do not stop penalties and interest from being assessed if the payment was made on time.
MAKE A MONTHLY TRANSFER OF MONEY TO A SAVINGS ACCOUNT
Open a savings account with a financial institution as soon as possible. When selecting a savings account, there are many factors to take into account. To readily withdraw money from the account to use for daily costs, for instance, you’ll want to ensure the account has access to your bank account. To lessen the chance of losing your money, you should also consider opening an account that pays a fixed interest rate.
After selecting the appropriate savings account, you must choose between using a debit card or a cheque. You can access the funds in your savings account with a debit card without ever writing a check. However, in order to collect your paycheck, you must have a checking account at the same banking institution.
If you don’t want to keep your money in a savings account, you can use a prepaid debit card to transfer money from your checking account to a savings account.
THINK ABOUT PAYING IN ADVANCE WITH YOUR REFUND
Consider taking the standard deduction on your tax return and paying nothing or the $1,000 minimum so you can write off a larger portion of your retirement savings.
You should consider paying in advance if you will soon receive a sizable refund. You’ll not only remember to pay your taxes more easily, but you’ll also pay less in taxes overall. You might want to consider paying a little bit more when making your quarterly anticipated tax payment. Your monthly phone and internet costs may decrease in the future due to this. A small overpayment each quarter can also assist you in avoiding any interest or penalties that may be imposed if you underpay your taxes.
Paying a little bit more on your quarterly due taxes may be a smart idea if you have the means to do so. It can assist you in lowering your monthly phone and internet expenses and avoiding any fines or interest fees that could result from failing to pay your taxes on time.
ASK FOR NO SUBSTRATES FROM YOUR DAY JOB.
You should know that you are able to deduct some of your educational costs. Your employer will still take a specific amount out of your paycheck for transportation, books, and tuition, even though it won’t appear on your W-2.
There are numerous ways to claim this deduction if you are a student. First, you can just save your receipts and include them with your tax return. You can determine your eligibility for the deduction using the IRS’s Student Tax Credit Calculator.
You will receive a copy of your tax return confirming the deduction was made after submitting your receipts.
It is also refundable because it is a deduction. Therefore, you can even ask for a return from your employer using Form 1098-T.
The Pell Grant and the Hope Scholarship are only two examples of the several scholarships that might be deducted. Logging through the IRS’s Student Tax Credit Calculator will allow you to see if these apply to you.
The seven steps to paying quarterly estimated taxes effectively
Paying quarterly estimated taxes is among the most crucial things you can do to save money. We made this in order to walk you through the procedure step-by-step and demonstrate how to save money while doing so.
- Find out your entire annual income.
- Determine your monthly spending.
- Determine your estimated quarterly taxes.
- Set aside the cash for your projected quarterly taxes.
- Pay your expected quarterly taxes.
- Save some cash for the following year.
- In the coming years, keep conserving money.
Conclusion
As long as you are employed, you must file and pay taxes on a quarterly basis (as opposed to annually). You can deduct your company expenses, including depreciation, as soon as you file your taxes. This tax season is a perfect time to transfer money from your personal account to your business accounts if you anticipate receiving a refund because you can even claim any tax savings on your personal return.