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Do you have secondary income? Run a company? You are facing a tax deadline today.
Individuals who pay the Internal Revenue Service quarterly must make their third installment for 2019 by September 16 at the latest.
Other deadlines for this year are April 15, June 17, and January 15, 2020.
Taxpayers who hope to avoid an underpayment penalty from the IRS must pay at least 90% of the taxes owing for a given year, or 100% of the liabilities of the previous year.
If your gross income adjusted on this year's return exceeds $ 150,000, then you owe 110% of the tax payable.
Although most 9 to 5 employees collect these taxes on each pay check throughout the year, business owners and other quarterly payers must calculate their estimated income and calculate their tax burden.
"When you calculate the estimated tax, you get the estimate for the entire year and cancel any withholding tax," said Lisa Featherngill, CPA and member of the personal financial planning committee of the American Institute of CPAs.
"Then you want to make sure that three quarters of what will be due will be paid until September," she said.
Oddities of income
Unexpected revenue sources can easily spoil taxpayer estimates. That's why they have to work closely with their accountant to determine what they need.
Take a year-end bonus. Even if you withhold taxes on your salary throughout the year, your vacation bonus might not be withheld properly.
The IRS offers companies two options for managing premiums paid to employees.
They can deduct a flat rate of 22% or incorporate the bonus into their normal salary and withhold the tax on full compensation of the worker.
"If the bonus deduction is not at the full rate and you are in a higher tax bracket, you will probably have to pay tax on it," Featherngill said.
Here's another tax break: your mutual fund investment in a taxable account.
These funds tend to allocate capital gains from the sale of the underlying investments during the fourth quarter.
Your quarterly tax payments must take into account the resulting tax liability.
Pay what you need
Not all taxpayers were properly selected for 2018, when the Tax Reduction and Reduction Act came into effect.
The new law has reduced personal tax rates, eliminated personal exemptions and almost doubled the standard deduction.
This meant that some taxpayers did not meet their obligations last year.
The IRS lowered the tax threshold from 90% to 85% in January, then to 80% in March.
Do not forget that this change applies only to the 2018 taxation year; taxpayers will have to refine their calculations for 2019.
This summer, the IRS has launched its new tax deduction estimator, a tool that helps you determine the amount of federal income tax levied on your paycheck.
This calculator also takes into account income from self-employment, investment income and more.
Adjusting the amount of income taxes deducted from your pay can mean the difference between a surplus withholding and a large refund – or a largely insufficient amount and a debt to the collector.
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