Estimated Payments.. What are they? Why you should care. #construction #trades #taxes

So if you own a business, and you may notice that even if you pay your full tax bill by April 15th, right, which is when taxes are due, right, you may notice that you also owe a penalty. Now, why? Well, you see, the IRS wants you to sort of pay as you go. Like when, if you ever were a W-2 employee, your taxes are withheld and they're sent in. That's paying as you go. When you're a business owner, and you don't have money coming out of your paycheck, so to speak, you still have to make those estimated payments. You still have to pay as you go, and those are done through these things called estimated payments. And if you don't pay enough in estimated payments or you wait till April 15th to make— to pay your tax bill, you're going to owe a penalty. Now, how do you avoid that? Well, there are these safe harbor rules that the IRS allows that say if you make estimated payments that total 90% of your current year's tax bill, right, or you pay 100% of last year's tax, or 110% if you made, if you had over $150,000 in income, then that safe harbors you. You're not going to pay that penalty. So the key is you want to pay at least 90% of the current year's tax bill or 100% of last year's or possibly 110% depending on what your income was. Now, when are these taxes due? When are these estimated tax payments due? Well, for January through March, they're due April 15th. For April and May, they're due June 15th. For June through August, they're due September 15th, and then from September until December, they're due January 15th. Now I know it's scattered and not, you know, consistent, but that's just how it is. So it's April 15th, June 15th, September 15th, and then January 15th. So that's how you avoid that penalty. If you have any questions, hit me up. I'm happy to help. Talk soon.