Hello Experts,
I need some help understanding about estimated tax penalty. I totally understand what estimated tax is and what it is for.
But where I need help with, is when you forgot to pay your estimated tax during the quarterly deadline.
I am specifically concerned about penalty and I need help understanding the special harbor or situations where you will not have to pay the penalty.
There are a few articles out there that mentioned exemptions. For example, if you are a US Citizen who fully paid past taxes on time during filing season will not incur a penalty fee for not paying the non-withheld tax portion on time quarterly. I also read about, if you have paid 90% of your outstanding tax in the prior year or 110% of your outstanding tax in the current year, you will also not incur a penalty fee. But I really struggle to understand these two statements. So, if you can help explain in layman's term, with an example hypothetical situation.
Finally, what is the best course of action if you missed payment on the quarterly due date?
Thank you very much.
