prepay estimated tax to avoid late fee
Hi, tax experts, hope your day is going well.
I filled my tax with FreeTaxUSA in the past years and love your guys' product. I was wondering if you can help me with an issue about prepay estimated tax to avoid late fee.
Last year, I found that my federal return shows I owe $1500 tax (due to my investments & CD interest earnings). I am single and file my personal tax (no business, just an ordinary salary man)
Although I am not sure whether I will owe tax again in 2024, can I prepay $1000ish now (in December) on IRS to avoid the late penalty fee when I file my 2024 return?
Or is it too late because I should have paid quarterly in 2024.
Also, I would greatly appreciate advice for best practices to avoid late penalty fee due to owed tax. :)
Thank you so much for your time and help! Have a great one!
Answers
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Hi,
Thank you for your question and comments.
The late payment penalty is calculate by the IRS based on timing of the income (the reason for quarterly payments), so it may not reduce your penalty to pay estimated taxes in December. You have two choices for eliminating the late payment penalty next year - withhold more federal income tax from each paycheck (use the additional amount withheld from each check line on the W-2) or make quarterly estimated payments. Generally, if you reduce the amount owed to less than $1000, you will not pay late payment penalties.
If you have additional questions, please let us know.
