Don’t miss another important deadline on April 18 – the date when expected tax payments for the first quarter of 2023 to avoid tax deadline penalty.
Tax Deadline on April 18
Pay-as-you-go means that you have to pay your income taxes throughout the year. Others must pay the IRS quarterly, while workers’ contributions are taken out of their paychecks. The first estimated tax date is April 18 to avoid tax deadline penalty. It applies to self-employed or gig economy workers, investors, and other filers who expect to owe $1,000 or more in taxes in 2023. Kathy Pickering, H&R Block‘s top tax officer, said that many taxpayers don’t know that their first quarter payments are due at the same time as their tax return for the previous year.
The IRS says that you may also need to pay quarterly taxes on retirement income, interest, dividends, capital gains, alimony, and rental income to avoid or lower penalties. In a news release last week, the IRS said that if you pay your estimated taxes every three months, most tax deadline penalty will be less or even go away.
However, the agency says that people in Alabama, California, and Georgia who were hit by natural disasters have more time to pay their estimated taxes. Here, you can find a list of all the tax breaks by area.
The ‘Quick and Dirty’ Way to Avoid Tax Deadline Penalty
The “safe harbor rule” is a “quick and dirty” way to avoid tax deadline penalty, says Mark Jaeger, vice president of tax operations at TaxAct. If your adjusted gross income is $150,000 or less, you can avoid late fees if you pay 90% of your taxes for 2023 or all of your taxes for 2022. But if you make more than $150,000, you’ll need 110% of your 2022 price. 0.5% of your unpaid amount per month, up to a maximum of 25%, plus interest, is the late payment penalty. “You definitely don’t want to pay that underpayment penalty,” Jaeger said, “because interest rates are going up.”
If you plan to make about the same amount of money as last year, you can look at your 2022 tax return to see how much you owed in taxes last year. If you made a lot of money, you can divide that number (or 110% of that number) into four quarterly payments. Using this method, you might still have to pay taxes in 2023, based on how much money you made that year. Most filers find it ‘easiest’ to pay online. Even though there are several ways to pay quarterly taxes, “the easiest way for most taxpayers is to pay online,” Pickering said.
You can pay with IRS DirectPay or through your online account with the IRS, which shows your payment records and other tax information and to make sure to avoid tax deadline penalty.