Paying Estimated Taxes Late, Take Two

Paying Estimated Taxes Late,  Take Two

Ooops. It’s that time of year again… Time to make your 4th quarterly estimated tax payment for 2010. Actually, yesterday was the time to make your 4th quarterly payment. Today, if you’re anything like me, you’re realizing that you forgot to take care of this.

I actually did the exact same thing last year. You’d think I’d learn, but I didn’t. Oh well. The good news is that, as long as you catch the error quickly, the penalty will be minicule. In fact, it maybe so small that the IRS won’t even bother applying it.

Here’s the scoop from Fairmark.com:

Penalty for Underpayment

What happens if you don’t pay enough, or don’t pay soon enough.

If you don’t pay enough estimated tax, or don’t pay on time, you’ll have to pay a penalty. It’s best to avoid this penalty, of course — but you don’t have to lose sleep over it. The penalty is equivalent to nondeductible interest on the amount you underpaid, for the period of the underpayment. If you underpay only a small amount, or you correct the underpayment quickly, the penalty will be small.

So what should you do if you forgot to make your payment? Go ahead and get it in the mail (or submit it via EFTPS) today. Beyond that, you could use IRS Form 2210 to determine whether or not you owe a penalty. In most cases, however, you can proceed as if you had paid it on time and the IRS will let you know if you owe anything extra.

It’s also worth noting that you’re exempt from penalties on a late 4th quarter payment if you’ve already paid in at least as much as your previous year’s tax bill (this is the so-called “safe harbor” amount), or if you file your return and pay the full amount due by January 31st.

4 Responses to “Paying Estimated Taxes Late, Take Two”

  1. Anonymous

    If you have a day job in addition to self-employment income, you can ask for extra withholding from your paychecks. Then you don’t have to worry about the estimated tax and the deadlines. Taxes withheld from paychecks are treated as paid evenly throughout the year even if you do a big catch-up in Q4.

  2. Anonymous

    Nickel! Set up the payments in advance!!

    EFTPS lets you schedule up to 4 payments, up to 365 days in advance. I always do it once a year – set it and forget it.

  3. Anonymous

    I use Google Calendar to schedule when to pay, I set a reminder for the 10th of month they are due and get an email alert. I’m terribly bad at remembering dates things are due so email alerts help me remember to pay taxes (and other bills).

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