Should You Pay Estimated Taxes?

For most people tax time only comes once year. However, for anyone who has to pay estimated taxes a large tax bill could be due several times a year. Again, most people do not have to worry about paying estimated taxes, but there are several circumstances that will put you in that category. The most common reason people need to pay estimated taxes is because they have self-employment income, but there are other reasons as well. You may need to pay estimated taxes if any of the following apply to you.

  • You or your spouse earned self-employment income.
  • If the stock market was kind and you cashed out a large portion of your gains, but you did not adjust your withholding on your W-4, then you might need to pay estimated taxes.
  • If you hire a nanny and pay her federal payroll tax for her, then you can make those in quarterly estimated taxes.
  • Any income you earned that was not subject to federal withholding on your W-4 could be subject to estimated taxes.

Not everyone who falls into one of these categories needs to pay estimated tax. So how do you decide if you should or shouldn’t pay these taxes? There are many answers to this question, but the bottom line is if you made enough income from untaxed sources that you will cause you to owe taxes when you file your return then you should make estimated tax payments. If you fail to do so, then you could pay a penalty. On the other hand if your deductions and credits will be more than the tax amount you would owe on this income then you are most likely OK in skipping these estimated payments. If you still aren’t sure whether or not you should make estimated tax payments, then contact us at GROCO for more advice. We can look at your situation and help you determine if these payments are necessary. Please contact us for help at 1-877-CPA-2006, or click here.

Posted in

Insanity

Insanity Transcript: So, you’re saying it’s ok. Insanity, is a side-effect of tax law.   To receive our free newsletter, contact us here. Subscribe our YouTube Channel for more updates. This transcript was generated by software and may not accurately reflect exactly what was said. Alan Olsen, is the Host of the American Dreams Show and the Managing Partner…

GROCO Receives Recognition From Fremont Education Foundation

Alan L. Olsen, CPA, MBA(tax)

Alan L. Olsen, CPA, MBA (Tax) Managing Partner Alan is managing partner at Greenstein, Rogoff, Olsen & Co., LLP, (GROCO) and is a respected leader in his field. He is also the radio show host to American Dreams. Alan’s CPA firm resides in the San Francisco Bay Area and serves some of the most influential…

Car Collections: Collectors, Investors, or Dealers Status

Car Collections: Collectors, Investors, or Dealers Status

Car Collections: Collectors, Investors, or Dealers Status Recently a 1936 Bugatti sold for over $30 million. Granted, that’s the world’s most expensive car, and one of only three ever built, but it raises an important financial question for car collectors. While acquiring beautifully restored antique cars may be someone’s high-octane passion, the IRS could see…

Feds and States Secretly Raising Tax Revenues

Feds and States Secretly Raising Tax Revenues

Feds and States Secretly Raising Tax Revenues Is the Administration out raising taxes without congressional approval? The surprising answer is a resounding YES. Receiving that notice that you are being audited strikes fear in the hearts of most people. For many, these tough economic times are about to get worse. Tax professionals from across the…