IRS penalty for shortfall of withholding

[mouthpiece]

If I am reading this right,
I didn't know this was a thing

 

[SlugSlinger]

And of course, they don’t pay interest on the withholdings greater than the amount owed, ie a refund.

 

[Rez Exelon]

Yeah, it is. I've been hit with it before and it sucks.

 

[Fr Mulcahy]

If I am reading this right,
I didn't know this was a thing

View attachment 441081

It is a thing for small businesses. I pay my estimated federal and state taxes on a quarterly basis. If I miss a target date then I pay a small penalty based upon the amount and how late I am.

My customers send me 1099 forms at the end of each year based upon how much they've paid me for that year.

Your tax calculation software or your CPA can tell you what you should pay an estimated taxes by quarter for the next year. If you pay less or not on time, then there is a penalty.

 

[KOPBET]

Yeah, I got hit for a $91 penalty last tax season (personal taxes).

 

[Rez Exelon]

It is a thing for small businesses. I pay my estimated federal and state taxes on a quarterly basis. If I miss a target date then I pay a small penalty based upon the amount and how late I am.

My customers send me 1099 forms at the end of each year based upon how much they've paid me for that year.

Your tax calculation software or your CPA can tell you what you should pay an estimated taxes by quarter for the next year. If you pay less or not on time, then there is a penalty.

It can also apply to personal taxes. I purposefully underpay every year for a variety of reasons, but some recent changes got things whacky and I was waaaay underpaid. IRS didn't like that.

 

[Hawgman]

I don’t own a business, personal tax only. Haven’t under paid in several years. This provision has been around quite a while. There is more to it. It’s not like you under pay by several hundred one year and they hit you with a penalty. Things change over time, of course. But, I under paid about 3 or 4 years running, anywhere from several hundred to 2k and there were no extra charges. Tax guy told me what triggers it but don’t remember the details. I remember it was kind of egregious, like the sort of thing I’d never do so I quit thinking about it. Still a crock though.

 

[Firpo]

Anyone know the interest rate before Oct 1st?

 

[Dorkus]

I find it interesting that it is "estimated taxes", yet you get fined when you are off from actual. The word "estimated" must have been changed to mean "exact" and no one told me.

 

[KOPBET]

Anyone know the interest rate before Oct 1st?

https://www.wsj.com/podcasts/your-m...as increased the,returns in fiscal year 2022.