What if You Forgot to Pay Estimated Taxes for the 2024 Tax Year?

The final round of federal estimated tax payments for the 2024 tax year was due on January 15, 2025. So, what if you’re late? Boston IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains.

Who Needs to Pay Estimated Taxes to the IRS?

Generally speaking, U.S. taxpayers who don’t have federal taxes withheld from their paychecks must pay estimated taxes to the Internal Revenue Service (IRS). These estimated tax payments are due quarterly, with payments generally due on the 15th of April, June, September, and January of the following year. As the IRS explains:

“Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. If . . . you receive income such as interest, dividends, alimony, self-employment income, capital gains, prizes and awards, you may have to make estimated tax payments. If you are in business for yourself, you generally need to make estimated tax payments [as well].”

The obligation to pay quarterly estimated taxes applies to individual and corporate taxpayers “if they expect to owe tax of $1,000 or more when their return is filed.” If a U.S. taxpayer fails to pay quarterly estimated taxes when due, penalties can begin to accrue immediately.

What Are the Penalties for Failing to Pay Estimated Taxes?

The IRS calculates penalties for underestimated tax based on three factors: (i) the amount of the underpayment, (ii) the period when the underpayment was due, and (iii) the IRS’ quarterly interest rate for underpayments. Additionally, as the IRS notes, “[w]e charge interest on penalties.” As a result, if you think you may owe penalties for non-payment of federal estimated taxes, you will want to address this situation as soon as possible.

How Do You Resolve Estimated Tax Deficiencies with the IRS?

Your options for resolving estimated tax deficiencies with the IRS depend on the specific circumstances involved. In some circumstances, your only viable option may be to pay what you owe. However, both individual and corporate taxpayers have options for challenging the imposition of IRS penalties in some cases, and an experienced Boston IRS tax lawyer can help you determine what options you have available.

If you are behind on your federal estimated tax payments, the one thing you do not want to do is wait and see if the IRS takes notice. Once the IRS opens an audit or investigation, your options will diminish significantly. As with other federal tax matters, a proactive approach is almost always best, and an experienced Boston IRS tax lawyer can help you make informed and strategic decisions.

Request a Confidential Consultation with Boston IRS Tax Lawyer Kevin E. Thorn

Are you behind on your federal estimated tax payments? If so, we encourage you to contact us promptly for more information. To request a confidential consultation with Boston IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 617-692-2989 or request an appointment online today.