Weiquan Lin | Moment | Getty Images

The third-quarter estimated tax deadline for 2024 is Monday, Sept. 16, and skipping a payment could trigger a penalty, according to the IRS.

Typically, you need estimated payments for any income without tax withholdings, such as earnings from self-employment, contract or gig economy work and investment or retirement income

Some filers also need estimated payments if they haven’t withheld enough taxes from a full-time or part-time job.  

Estimated payments can help avoid “refund disappointment or balance due shock,” said Mark Steber, chief tax information officer at Jackson Hewitt.

If you’re unsure, there’s a “general rule of thumb” for who should make a payment, the IRS outlined in a news release last week.   

More from Personal Finance:
Senate debates taxes ahead of Trump’s 2025 expirations
Momentum builds in Washington to eliminate certain Social Security rules
Here’s the deflation breakdown for August 2024 — in one chart

You should make estimated tax payments if you expect to owe at least $1,000 in taxes after subtracting your 2024 withholdings and tax credits or if you can’t meet so-called safe harbor rules, according to the IRS.

The safe harbor rules say you can avoid IRS penalties by paying at least 90% of your 2024 tax liability or 100% of 2023 taxes, whichever is smaller. You must meet these thresholds throughout the year.

That percentage jumps to 110% if your 2023 adjusted gross income was $150,000 or higher. You can find adjusted gross income on line 11 of Form 1040 from your 2023 tax return.

How to avoid a ‘timing penalty’

The ‘easiest’ way to make tax payments

Don’t miss these insights from CNBC PRO

How Trump's and Harris' tax plans would affect your wallet



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *