Underpayment Penalty

The IRS requires you to pay estimated tax payments on income that is not subject to withholding. Some examples of this income includes self-employment, interest, dividends, alimony, rent, and gains of sale of assets. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty, even if you are due a refund when you file your tax returns. It is your responsibility to make the estimated tax payments in order to avoid the penalty fee.

If you owed an additional tax for 2014, you may have to pay estimated tax for 2015. The IRS rule for higher income taxpayers is that you must pay the smallest of 90% of your total expected tax or 110% of the total tax found on your 2014 returns. You can calculate your estimated payments using our Estimated Payment Calculator, which you can find it on our website.

Payments must be made to the IRS quarterly, in order to avoid a penalty. The payment dates are due the 15th of the month after the end of each quarter. For example for the first quarter January 1st to March 31st, is due on April 15th. These payments can be made online at the Electronic Federal Tax Payment System (EFTPS), by phone at 800-555-4477 or you can mail the payment with a check, along with a completed 1040 ES to the address on your 1040 ES form.

All information in regard to underpayment penalties of estimated tax payments was found at the IRS website. For more details please see our Estimated Payment Calculater in our form list.

If you have any questions or would like to schedule an appointment please feel free to contact us at 630-663-1500 or you can email us at tax@greatwaysinc.com.