estimated taxes
client has tax bill of approx. 15 to 20k per year. Income comes in different months. Usually does not get to make any est tax payments but then pays the bill in full every April.
since he missed 3 est tax payments already, should he pay some now since he has some extra money right now?
Will there be a big penalty to him?
or should he just wait and pay the tax bill in full in April of 2014?
Thank you.
Douglas
Permalink Submitted by Alan - IRA critic on Wed, 2013-10-02 19:43
The sooner he pays toward his estimates, the less the underpayment penalty will eventually be. The current interest rates are fairly low but payments now will still reduce his penalty. If he can pay through withholding from any source, this would reduce the penalty to a greater degree because withholding is deemed paid throughout the year even if paid late in the year.