The clock is ticking for taxpayers who need to submit their third quarter estimated tax payments. The IRS has set September 16, 2024, as the deadline, making it crucial for many, including gig workers, retirees, and small business owners, to stay ahead of their tax obligations.
For those who have been impacted by natural disasters across 17 states, Puerto Rico, and the Virgin Islands, there’s some relief. If you’re in one of these areas, you may qualify for an extended deadline, giving you more time to manage your payments without penalty. The specific deadline depends on the nature of the disaster and where you are located.
Who Should Make Estimated Tax Payments?
If you don’t typically have taxes withheld from your income throughout the year, estimated tax payments are a must. This applies to a variety of taxpayers, from freelancers and sole proprietors to partners and S corporation shareholders. Essentially, if you expect to owe at least $1,000 when you file your 2024 tax return, you should be making estimated payments.
Here’s a general rule of thumb to follow:
- If you expect to owe $1,000 or more after accounting for withholding and credits.
- If your withholding and credits will be less than 90% of the tax shown on your 2024 return or less than 100% of your 2023 tax return.
How to Calculate and Pay Your Estimated Taxes
Calculating your estimated tax involves projecting your adjusted gross income, taxable income, deductions, credits, and taxes for the year. A good starting point is to reference your 2023 tax return. To help with this, the IRS offers several online tools, including the Tax Withholding Estimator and Interactive Tax Assistant, both available on IRS.gov.
When it’s time to pay, the IRS offers several secure options:
- Direct Pay: Make a payment directly from your checking or savings account without fees.
- Debit/Credit Cards: Pay through IRS.gov/payments or the IRS2Go app, though be aware of processing fees.
- EFTPS (Electronic Federal Tax Payment System): Another secure way to pay electronically.
- Check or Money Order: If you prefer, you can send in your payment the old-fashioned way.
Avoiding Penalties for Underpayment
If you underpay your taxes throughout the year, you might face penalties, even if you’re due a refund when you file. Late or missed estimated payments can lead to penalties. The IRS provides Form 2210 to help you figure out if you owe any penalties and offers a waiver option for unusual circumstances.
Extra Time for Disaster-Affected Taxpayers
For those in disaster-affected areas, the IRS automatically extends your tax deadlines. Currently, if you’re in parts of Arkansas, Iowa, Mississippi, New Mexico, Oklahoma, Texas, or West Virginia, you have until November 1, 2024. For those in states such as Florida, Georgia, and others, the deadline extends to February 3, 2025. For the latest updates, check out the Around the Nation page on IRS.gov.
What to Know About Form 1099-K
If you’ve been earning through payment apps, online marketplaces, or payment cards, you might receive a Form 1099-K for 2024. Whether you’re a gig worker or an online seller, it’s essential to report all income, even if you don’t receive a 1099-K.
Final Estimated Payment Deadline for 2024
Lastly, keep in mind that your fourth and final estimated tax payment for 2024 is due by January 15, 2025.