2023 Quarterly Estimated Taxes

Key Dates for Quarterly Estimated Tax Payments in 2023:

To fulfill your tax obligations effectively, it is crucial to make timely quarterly estimated tax payments throughout the year. Mark these important deadlines for the 2023 tax quarters on your calendar:

Q1: January 1 – March 31, 2023 | Deadline: April 18, 2023

Q2: April 1 – May 31, 2023 | Deadline: June 15, 2023

Q3: June 1 – August 31, 2023 | Deadline: September 15, 2023

Q4: September 1 – December 31, 2023 | Deadline: January 16, 2024*

*Note: If you file your 2023 tax return by January 31, 2024, and pay the entire balance due at that time, you are not required to make the quarterly payment due on January 17, 2023.

How to Submit Estimated Tax Payments:

You have two convenient options for submitting your estimated tax payments. You can use the voucher provided with Form 1040-ES and simply mail a check, or make secure online payments through the IRS website. When paying online, there is no fee if you use your bank account directly. However, if you prefer to pay with a credit or debit card, there are nominal fees ranging from $2.20 to $2.55 or a percentage between 1.87% and 1.98% of your payment amount.

Who Needs to Pay Estimated Taxes?

For most self-employed individuals and businesses, making estimated tax payments is necessary. However, certain circumstances may exempt you from this requirement. The primary determining factor is whether your estimated tax payments and withholding throughout the year cover at least 90 percent of your total tax liability. To assess your liability accurately, you can refer to your previous year’s tax return. If you have already paid an amount equivalent to your total tax liability for the previous year, you are not obligated to make additional payments. This provision generally is known as the Safe Harbor rule.

Nevertheless, if your income surpasses certain thresholds, you may need to pay slightly more. If your Adjusted Gross Income (AGI) exceeds $150,000, you must pay 110 percent of your previous year’s tax total to avoid potential penalties. For married individuals filing separately, the higher barrier applies if their taxable income exceeds $75,000.

Penalties for Late or Insufficient Quarterly Tax Payments:

Missing a quarterly tax payment deadline can unfortunately lead to penalties and additional costs for business owners. It is crucial to promptly submit your quarterly tax payments to avoid complications. The IRS imposes penalties based on the amount underpaid and the lateness of your payment, which are then added to your tax liability when filing your annual tax return. Even a slight delay, such as missing a deadline by a few days, can trigger these additional costs. To prevent such penalties and ensure smooth tax compliance, it is essential to make timely and sufficient payments throughout the year.

Simplifying the Process of Quarterly Estimated Taxes:

While quarterly estimated taxes may appear daunting initially, there are strategies to simplify the process:

If you are married and filing jointly with an AGI below $150,000, you can make a payment equivalent to 100% of your previous year’s income taxes.

Alternatively, paying 90% of your estimated tax for the current year will also help you avoid penalties.

At the beginning of each year, calculate your estimated tax payments and develop a savings plan to ensure you are prepared when payment deadlines approach.

If you find the requirements complex or lack the time to navigate them, Dimov Tax & CPA Services is here to help. Collaborating with our experienced accountants can save your business money, prevent penalties, and allow you to focus on your core operations—expanding and growing your business. Contact us today for professional assistance with your accounting needs.