Ashlea Ebeling
speaker
2,002 appearances
38 recordings
1 series
first heard Jul 2022
last heard Feb 2025
Ashlea Ebeling’s voice in public audio — every appearance, attributed to the second.
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Appearances
Why it's happening is it's statutory.
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It's tied to the federal short-term rates.
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So it's most important for gig workers and consultants, people who don't have taxes withheld and figure they can pay their taxes come April.
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People who get steady paychecks with tax withholding could also be affected if they have additional income and get the math wrong.
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It's 8% of the taxes that you've underwithheld.
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And it's not a flat, oh, I owe $10,000 and it's $800 because it's calculated on a daily basis.
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And it's a blended rate for the year.
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But the bad news is it's gone up to 8 percent this quarter.
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So the good news is if you pay in now, it's possible that you could reduce the penalty or it would even be eliminated.
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Yes, that's exactly what would happen.
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The penalties could actually run in the hundreds or even thousands of dollars.
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The IRS assessed more than $1.8 billion in these penalties on nearly 12.2 million individual returns in fiscal year 2022.
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So that's a lot of people.
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So beyond the underpayment penalties, things can get even worse.
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Total tax bills basically increase the risk that you might not be able to pay your full balance in April.
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And then failing to pay the full balance can lead to more penalties and worst case scenario, liens and levies.
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For most taxpayers, the employer withholds taxes in every paycheck, but staying on top of estimates is important for people with fluctuating or self-employment income.
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There's other scenarios that can take place for taxpayers who get bonuses and equity compensation when the withholding is too low.
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And even people with higher than usual interest from high-yield savings accounts could be affected.
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Probably the most common scenario is when wage earners who are used to having tax withholding by an employer start a business, they might not know that they're subject to the quarterly estimated tax payments.
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Showing 1081–1100 of 2,002 · page 55 of 101
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