As an individual or business owner, the Internal Revenue Service (IRS) requires that you pay taxes as you receive your income throughout the year. This happens in one of two ways: Via withholding from your employer, or through estimated tax payments.
Failing to pay taxes or paying them incorrectly can easily cause you to experience IRS issues that have the potential to follow you for months, maybe even years. This is why it is so crucial to make sure you are not only paying your taxes, but that you are paying them properly and in the most efficient way possible for both you, and for the IRS.
The Purpose of Quarterly Payments
Typically, most people pay their taxes via withholding, which means their employer automatically deducts the taxes they owe from their paycheck each period. If your taxes are not withheld from your paychecks, however, or if not enough taxes are withheld, then you are likely required to pay four separate payments over the course of a year. These scheduled payments account for the money that is not being taken out of your paychecks. Generally speaking, anyone who earns salaries or wages may fill out a W-4 form with his or her employer to avoid having to pay estimated tax payments throughout the year. You do this by requesting that your employer take out a larger amount from each check.
Determining Whether or Not You Should Be Paying Quarterly
Whether you receive a paycheck from an employer or not, consider the following guidelines to help you determine whether you should be paying money quarterly to the IRS:
If you do not pay quarterly like you should, you may face a penalty for underpayment of estimated taxes. Depending on your circumstances, there may be a way to lower or completely waive the applicable penalties. For example, if your income was received unevenly throughout the year or you were unable to pay due to casualty, disaster, or other special circumstance, any of these factors may affect your responsibility to pay the fine.
If you are concerned about your need to pay quarterly tax payments, or you encounter IRS issues that threaten your financial well being, it is important to get in touch with a knowledgeable Cook County IRS issues lawyer to make sure you have a firm understanding of your rights and responsibilities as a taxpayer. The moment you run into trouble, call the Law Offices of Eric G. Zelazny at 708-888-2299 for a personal consultation.