Estimated tax

[dmaf]

I want to pay estimated taxes because otherwise I'll get underpayment penalty, but it's the first year it has happened to me. Unfortunately, I saw that the deadline for the first 3 quarters has already passed, is there any way I can get some sort of extension and still pay the estimated tax for these quarters (I underpaid for all quarters) to avoid the penalty? TIA.

[Carl]

Well, if you didn't pay the first and 2nd quarter yet, you've already got a late payment penalty for those two. So what you need to do is pay your 3rd quarter taxes *NOW*. So that you "catch up" everything with the 3rd quarter payment, you need to send the IRS at least 20% of your gross earnings for the 1st, 2nd and 3rd quarters. That will stop the accumulation of interest on your failure to pay for the first three quarters.

You can pay right now online at http://www.irs.gov/payments. Pay attention to the screens as you work it through, so that you CLEARLY identity this is a 1040-ES payment for tax year 2018, for the 3rd quarter. Again, that 3rd quarter payment needs to be at least 20% of your gross earnings for the entire year to date. Then your 4th quarter payment is due by Jan 15, 2019.

Since you never paid the 1st and 2nd quarters, I would recommend that for the 3rd quarter payment you make it 25% of your gross business income year to date, just to "cover" yourself with the late payment penalties that you know have been accumulating.

Now generally in the first year of business, you can get a waiver for the fines and penalties. But by law the IRS can not exclude the accumulated interest on any late payments. But generally the fines and penalties for late payment are so low that it's just not worth the paperwork.

[dmaf]

Thank you for the reply. When you say *NOW*, isn't the deadline for the 3rd quarter already passed? Why is it different than the other first 2 quarters?

And just to be clear, this is not because of business, I'm employed by a company, but I think the withholdings weren't enough.

[Carl]

Google is your friend.

https://www.irs.gov/faqs/estimated-tax/individuals/individuals-2

[dmaf]

I still don't understand what you meant in the first response. From the link you sent (and from what I had found myself before), the deadline for the 3rd quarter is Sep 15, so that has passed already. So the only quarter I can still make payments for is the 4th, isn't it?

[Carl]

Your are *LATE* for 3 quarters. Period. End of story. So get it all "caught up" with the 3rd quarter payment and you will stop the accumulation of late fees, fines and penalties. PAY IT YESTERDAY if not sooner.

4th quarter is not due for 6 weeks. There is no way on this green earth that you can *know* what your 4th quarter earnings will be so that you can pay now, and "know" that you have covered your 4th quarter taxes without grossly overpaying and possibly leaving yourself short. This is not anything like paying your mortgage payment 6 months in advance. In fact, it has no relation to something like that.

Now if you want to waste time sending in separate 1st, 2nd and 3rd quarter payments, go ahead. But you *really* need to quit asking questions and pay. The more you chat, the more your late fees and interest accumulate.

The fastest way to do this so as to get it paid today without having to wait for the IRS to get it in the mail and process it, is online at www.irs.gov/payments. Make *SURE* you read *all* information on each screen so that your payment is applied to the correct tax year and the correct tax quarter. If you apply it wrong, you can *NOT* undo it without going through one hell of a rigamarole on the phone with the IRS (that is, if you can actually get a human on the phone whose primary language is English.)