No one wants to be charged an underpayment penalty. So, how can you be sure that the quarterly estimated payments you’re making are sufficient to cover your tax liability?
If a taxpayer’s quarterly estimated tax payments equal at least 90% of their tax liability for 2013, the underpayment penalty will generally not apply. An alternative way to determine a taxpayer’s estimated taxes for 2013, would be to take a look at the tax liability from 2012.
There are two ways to utilize this method:
What we highly recommend is taking the time now to review your current tax situation. A mid-year tax projection gives a more concise picture of where the taxpayer stands with not only their tax liability, but may shed some light on ways for the taxpayer to decrease their overall taxes for the year.
Do you have questions about making estimated payments or your current tax situation? Contact us and we’d be happy to offer our guidance and services to help ease your mind.