Date: September 2, 2021
The time to pay your estimated taxes is approaching!
It is that time of year again- estimated taxes are due on September 16th!
Nobody WANTS to pay taxes but it is a necessary evil. What is NOT necessary is overpaying your taxes. As a business owner, the government requires you to pay every three months based on the income you’ve made.
The problem is most business owners don’t know how MUCH to pay every quarter, so they usually do one of two things: Don’t pay anything at all and wait until the end of the year when their accountant tells them how much they owe, OR use the cute little vouchers that their accountant gave them last year.
The system is broken!!!! This approach is slanted to benefit the IRS at the expense of taxpayers. The way we work with clients is to evaluate and analyze the financial performance every three months, determine what (if any) strategies we can employ to provide opportunities for reinvestment into the company, and minimize the tax exposure so they only pay what they legally have to each quarter.
You may not realize this but there IS a penalty for underpaying your estimated tax. What the IRS DOESN’T want you to know is that there are multiple ways for you to avoid these penalties. One of these strategies is called the ‘SAFE HARBOR RULE’ which states that you only need to pay either 90% of your current year’s liability OR 100% of last year’s liability. In addition, the Coronavirus Aid, Relief, and Economic Security (Cares) Act permits some self-employed individuals to defer estimated tax payments altogether.
Does this sound like a headache you would prefer to avoid? We understand and are here to help YOU. Click here to schedule with us so we can help you sort through your tax needs!