Reminder: Now is the time to make your estimated tax payment
If you have not already done so, now is the time to review your tax situation. The second quarter due date for paying your estimated taxes is Thursday, June 15, 2023. You can make an estimated quarterly tax payment using Form 1040-ES.
Second quarter estimated taxes
You must withhold at least 90% of your 2023 tax obligation or 100% of your 2022 tax obligation. If your income is over $150,000 ($75,000 if married filing separately), you must pay 110% of your 2022 tax obligation to avoid an underpayment penalty. A quick look at your 2022 tax return and a projection of your 2023 tax obligation can help determine if a payment is necessary.
Additional tax considerations
- Avoid an underpayment penalty. You could be subject to an underpayment penalty if you do not have proper tax withholdings during the year. The penalty can occur if you do not have proper withholdings throughout the year.
- W-2 withholdings have special treatment. A W-2 withholding payment can be made at any time during the year. It would then be treated as if it was made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 withholdings to make up the difference.
- Self-employed workers need to account for FICA taxes. In addition to your income taxes, remember to also account for your Social Security and Medicare taxes. Creating and funding a savings account for this purpose can help avoid a possible cash flow hit each quarter when you pay your estimated taxes.
- Don’t forget state obligations. With the exception of a few states, there is often also a requirement to make estimated state tax payments if you have to do so for your federal taxes. Consider conducting a review of your state obligations to ensure you also comply with these quarterly estimated tax payments.
Contact our RRBB accountants and advisors if you have any questions or are ready to take the next step.
Get free tax planning and financial advice