The main way people pay their taxes over the course of the year is through having a portion of their wages withheld. However, this is not the only method for during-the-year tax payments. Another major type are estimated taxes.
Estimated taxes are tax payments individuals make to the Internal Revenue Service during the course of the year beyond what is withheld from their wages. It is a common type of tax payment for those who end up with significant income beyond their wages or those who are self-employed.
Making estimated tax payments over the course of the year is required for some individuals. Generally, a person is required to pay estimated taxes if their expected tax liability (beyond what has been withheld from their wages) exceeds a certain mark. Though as a note, there are a range of different complex rules regarding whether a given person would or would not be subject to a requirement to make these types of payments.
When a person is subject to this requirement, paying less in the way of estimated taxes than they should have could expose them to a tax penalty.
There are four different deadlines throughout the year when it comes to paying estimated taxes. Each is associated with a different payment period. Being late on an estimated tax payment is another thing that can leave a person with a penalty from the IRS.
So, there are a variety of different types of troubles with the IRS a person could potentially end up in in connection to estimated taxes. This includes troubles rooted in allegations that they:
- Failed to pay estimated taxes when they were in fact required to.
- Paid less in estimated taxes than they should have.
- Missed one of the estimated tax payment deadlines.
When a taxpayer is facing penalties or other serious consequences in relation to allegations by the IRS that they made missteps when it comes to estimated taxes, they may want to promptly have a skilled tax attorney review their situation and give them guidance on it.
Source: Internal Revenue Service, “Estimated Taxes,” Accessed Dec. 9, 2016