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There’s still time to avoid penalties if you haven’t paid enough taxes in 2022 — but time is running out.
If you’re self-employed or receive income from gig economy work, investments and more, the deadline for your fourth quarter 2022 estimated tax payment is January 17.
According to financial experts, your down payment can lower your 2022 tax bill and bypass additional penalties and interest.
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“This is where you can make yourself whole at the end of the year,” says certified financial planner John Chichester Jr., founder and CEO of Chichester Financial Group in Phoenix.
if you are not deduct tax From your income, you will typically have to make four payments per year. Otherwise, you may have to pay interest and a late payment penalty 0.5% of your unpaid balance per month or part month, up to 25%.
the irs says direct pay The “fastest and easiest” way to pay. You can also pay through your irs online accountthat provides access to payment history or through digital means electronic federal tax payment system, You can see other option through irs payment website,
This season, the IRS will Start accepting individual tax returns from January 23rd, The federal tax filing deadline is April 18 for most filers.
Know the ‘Safe Havens’ to Avoid Federal Tax Penalties
One important thing to know: Chichester said there is a “safe harbor” for avoiding the underpayment penalty for your annual federal taxes.
You will not pay a federal penalty if you pay less than 90% of your 2022 taxes or 100% of your 2021 bill if you paid them during 2022 and through the January 17 deadline. Your adjusted gross income is $150,000 or less. (Opt for the latter strategy, and you’ll need 110% of your 2021 bill if you make more than $150,000.)
However, the safe harbor doesn’t guarantee you won’t pay more federal taxes for 2022, Chichester said. He urges clients to set aside at least 20% of earnings to cover federal taxes, plus a smaller percentage for state taxes, depending on where they live.