If you haven’t already, you should assess your tax situation and file Form 1040-ES to make an estimated quarterly tax payment. The deadline for the fourth quarter of the 2022 tax year is here! Tuesday, January 17, 2023, is the due date for your fourth quarter estimated taxes.

Fourth Quarter Taxes Due

You must withhold at least 90% of your federal tax obligation for 2022 or 100% for 2021. If payment by Tuesday, January 17, 2023, is necessary, a quick review of your 2021 tax return and a prediction of your 2022 tax return can help. Additionally, here are some other factors to think about:

Underpayment penalty. You risk an underpayment penalty if you don’t have the proper tax withholdings. If you do not make the appropriate withholdings all year, you may be subject to a penalty. Therefore, if you didn’t pay enough taxes in the previous quarters, a fourth-quarter catch-up payment might not help you escape an underpayment penalty.

Self-employed. Don’t simply pay your income taxes. You must also pay your Social Security and Medicare taxes. For this reason, opening and establishing a savings account will assist you in avoiding taking a financial hit each quarter when you pay your estimated taxes.

State obligations. Except in a few states, you must make projected state tax payments when required to do so for your federal tax responsibilities. Consider reviewing them to ensure you fulfill your state requirements. Then, make those quarterly projected tax payments.

Avoid Penalties

To avoid paying an underpayment penalty if your income exceeds $150,000, you must pay 110% of your tax obligation from the previous year. If you’re married and filing separately, the threshold is $75,000. If you have any questions, please contact our RRBB accountants and advisors for further assistance. In the meantime, keep an eye on our blog posts for the upcoming 2023 tax calendar.