Q4 Individual Estimated Taxes Due January 15
As a reminder Q4 estimated taxes for individuals is due January 15. (If you have a corporation, they were due last month.)
“Why do I owe money?” is a common question I get from clients who don't plan for taxes. Owing money is fine if you have funds budgeted to pay your tax each April. Owing money isn’t pleasant if you face a penalty for underpayment of tax or didn’t budget for a large payment in April.
The main reasons you owe tax
(a) you have income not subject to withholding tax (interest, dividends, capital gains, rent, partnership K-1s)
(b) you elected to have no withholding tax (W2, Social Security, retirement, unemployment) and/or
(c) you receive bonus income (such as bonuses, stock option income, RSU income) taxed at a flat 22% rate and you are in a higher tax bracket.
If you need assistance with a tax projection or calculating estimated taxes due January 15, please contact me.
FYI In June, the Wall Street Journal wrote an article about a recent quadrupling of estimated-tax penalties due to higher interest rates and ways to avoid them.
For my comments in the Wall Street Journal see