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Quarterly tax

Hello as a sole proprietor hairstylist . 
curious what is the actually amount of money fee for not paying quarterly vs paying at the end of each year ? 

2 Replies

Quarterly tax

for paying too little, or no estimated tax during the year,

there is a penalty which can be significant.


IRS requires you to estimate your total tax for the year and pay as you go.


@rachel hairstylist  

Employee Tax Expert

Quarterly tax

Here is the IRS withholding estimator, which will allow you to determine if you owe money to the IRS, and therefore need to make estimates: https://www.irs.gov/individuals/tax-withholding-estimator 


The IRS will not charge you an underpayment penalty if: You pay at least 90% of the tax you owe for the current year, or 100% of the tax you owed for the previous tax year, orYou owe less than $1,000 in tax after subtracting withholdings and credits.


Here is an article about how the penalty is calculated: https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty 


Here is an article the IRS published recently about the penalty rates: https://www.irs.gov/newsroom/interest-rates-remain-the-same-for-the-third-quarter-of-2023#:~:text=Fo... 


For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Here is a complete list of the new rates:

  • 7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
  • 4.5% for the portion of a corporate overpayment exceeding $10,000.
  • 7% for underpayments (taxes owed but not fully paid).
  • 9% for large corporate underpayments


Here is a link to eftps, which you can use to make estimates electronically:  https://www.eftps.com/eftps/ 


Thank you,




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