This will likely be true, especially if they failed to take action to avoid another shortfall by increasing their withholding during 2021. People who owed tax when they filed their 2020 tax return may find themselves in the same situation again when they file for 2021. Because the penalty calculation considers the date on which the payment or payments were made, even making a payment now, rather than waiting until the April filing deadline, often helps. If a taxpayer failed to make required quarterly estimated tax payments earlier in the year, making a payment soon to cover these missed payments will usually lessen and may even eliminate any possible penalty. Self-employed people and investors, among others, often pay tax this way.Įither payment method-withholding or estimated tax payments-or a combination of the two, can help avoid a surprise tax bill at tax time and the accompanying penalty that often applies. Making quarterly estimated tax payme nts throughout the year to the IRS.Withholding from paychecks, pension payments and some government payments, such as Social Security benefits or unemployment compensation.This means that taxpayers need to pay most of their tax during the year as income is earned or received. The deadline for making a payment for the fourth quarter of 2021 is Tuesday, January 18, 2022.
Taxpayers who paid too little tax during 2021 can still avoid a surprise tax-time bill and possible penalty by making a quarterly estimated tax payment now, directly to the Internal Revenue Service. WASHINGTON - The IRS urges taxpayers to check into their options to avoid being subject to estimated tax penalties, which apply when someone underpays their taxes.
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