Is Paying Estimated Taxes Actually a Good Idea?
Is Paying Estimated Taxes Actually a Good Idea?
For most people, thinking about taxes outside of April is a sin. However, anyone who earns self-employment income must think about taxes all the time. That’s especially true every three months when it’s time to pay quarterly estimated taxes.
No one really likes paying estimated taxes. After all, who wants to give away large chunks of money all at once four different times during the year? Nobody! But when you don’t fill out a W-4 and the IRS doesn’t automatically take its cut from a payroll check, you typically have to pay these taxes.
Despite the unpleasant feeling you get when you lay that money down and ship if off to the IRS, there are some reasons paying your quarterly estimated taxes is actually a good thing.
Imagine the feeling you would get if you were expecting a large refund at tax time, only to find out you didn’t pay enough and you actually owe a significant amount. By paying your estimated taxes you save yourself the shock of a surprise tax bill.
Furthermore, you might even owe additional fees and penalties if the bill is too high. In fact, if you owe more than just $1,000 the IRS could tack on penalties. That’s not a surprise anyone wants.
Lastly, when you pay quarterly estimated taxes you also get a better idea of your income. When you make these payments you tend to watch your cash flow more closely, which helps you keep a budget. That’s a good idea for everyone.
Even though making quarterly estimated tax payments sounds unpleasant, the reality is it might not be such a bad idea after all.
We hope you found this article about “Is Paying Estimated Taxes Actually a Good Idea?” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
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Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
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To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party…
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