The Internal Revenue Service (IRS) has issued a reminder to pay for those who may still owe taxes from 2024 as a quarterly tax payment deadline approaches.
Why It Matters
The final estimated quarterly tax payment deadline is Wednesday, January 15. There are four of these every tax year, and the upcoming one is a deadline for income earned between September 1 to December 31.
What To Know
The IRS explained in a release issued on January 7: "Income taxes are pay-as-you-go, meaning taxpayers must pay most of their tax throughout the year in which their income is earned or received. Usually this is done by withholding tax from paychecks or by making quarterly estimated tax payments to the IRS (or by a combination of both)."
The government agency said that taxpayers who pay quarterly can "sometimes overlook this step," which can result in "unexpected penalties and fees when they file their returns in 2025."
Quarterly tax payments should be made to the IRS four times a year by those who earn or receive income that is not subject to tax withholding, such as self-employed workers or independent contractors.
The IRS also advises taxpayers who owed money on their previous tax return might owe again the following year and should consider making estimated quarterly payments to avoid a potential tax bill or penalty down the line.
Common examples of taxpayers who may need to make quarterly payments include:
- Those who previously itemized deductions but now take the standard deduction.
- Households with two wage earners.
- Employees with additional income from nonwage sources, like dividends.
- Individuals with complex tax circumstances.
- Those who did not adjust their tax withholding as needed.
How To Make A Quarterly Tax Payment
Payments can be made through an IRS Online Account, using IRS Direct Pay, debit or credit card or digital wallet, or the Treasury Department's Electronic Federal Tax Payment System (EFTPS).
What Happens If You Don't Pay?
Unpaid taxes are subject to the Failure to File penalty, which is 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. The penalty cannot exceed 25 percent of your unpaid taxes.
What's Next
Income tax filings and payments are due by or on April 15 this year, with the IRS accepting returns from late January onward.
Newsweek reached out to the IRS via email outside of regular working hours for clarification on when it will be open for tax returns and payments this year.
Those who are eligible and wish to use IRS Free File can do so from this Friday, January 10, the IRS announced this week.