Filing estimated taxes ?
2020 was the 1st year that I worked as self-employed (1099) and made 41,000 for 3 months during summer- I did not pay any estimated taxes after this, such asSept 21. Will I be hit with late tax fees? I would like to pay now, In Jan 2021 - is this appropriate?
- Ron AkiaLv 71 month ago
The deadline for paying 1040-ES payments was 15 January. You will be charged a penalty for missing that date.
- SlickterpLv 71 month ago
Yes, if you owe over $1000 when you file, you owe penalties,
- StephenWeinsteinLv 71 month ago
There might be a fee, which is called a penalty. It wouldn't be very much, typically about 3-6% of the tax.
You can pay now if you want, but you'll still have to pay the penalty/fee if it applies to you, and we're getting close to the time that you'll be filing your taxes soon anyway.
- mercedesLv 71 month ago
The sooner the better
- How do you think about the answers? You can sign in to vote the answer.
- AmyLv 71 month ago
Yes you will be hit with late fees. You were supposed to pay either 90% of the tax you owed this year or 100% of what you paid in 2019. If you owed no tax in 2019, then there's no penalty for paying nothing in 2020.
The sooner you pay, the lower the penalty.It's pretty easy to find where to pay on irs.gov. Make sure you indicate that the estimated tax is for 2020.
You have a choice of ways to calculate the penalty. One way is to assume you owed an equal amount each quarter. The other is to document the exact days that you received income and then work out the actual tax due each quarter. This is obviously a lot of work, but it can lower the penalty if your income was disproportionately late in the year.
- Coffee DrinkerLv 71 month ago
Taxes are supposed to be paid each quarter as you earn the money, not just at the end of the year by April 15th.
So even if you pay in full now, you could be penalized for late payment.
However the IRS is very lenient on this if its your first time with significant self employment/business income. They will usually waive all the penalties if you've never had a late payment penalty before.
Even if you do get a penalty that isn't waived for some reason, it won't be huge. I had a situation one year where I moved a bunch of money from pre-tax IRA to taxable accounts. I knew I'd trigger a tax bill and penalties but had other reasons for making the move that justified the taxes. I ran some rough numbers and thought I'd owe about $500 on my tax return so I didn't make any extra payments during the year. I ended up making a mistake on my calculations and actually owed about $2,000 when I filed and the penalty for late/under payment was only $18. Not exactly a life-altering problem.
Your best bet is to go on the IRS website and pay what you can now. Even though you are already late, the sooner you pay the less likely it is the IRS will access any penalty and if they do it may reduce the size of the penalty.
Then if you have self employment (1099) income again be more proactive about making your estimated payments on time each quarter as you earn the money.
The bottom line is that this won't be anything to lose sleep over. Worst case scenario you're looking at the taxes you would have owed anyway plus a few hundred bucks in penalties at most.
- JudyLv 71 month ago
You'll pay penalties. January deadline was last week.
- Anonymous1 month ago
The 4th quarter estimated tax due date was January 15.
There is a little loophole that says if you file your tax return by January 31 and pay 100% of the tax due with your return, your tax is not considered late.
They are a bit more forgiving in your first year of self-employment, but our tax system is meant to be pay-as-you-go. You do not "file" quarterly estimated taxes. You just make a payment. You can do it right on the IRS website and it literally takes about 90 seconds.
- Anonymous1 month ago
Yes, go ahead & pay. The penalties & interest are minimal but its worth paying quarterly in the future. If you overpay, you will get a refund. If you underpay you will owe more.
I never made $41k in 3 months in my life.