Estimated tax payments are required for Federal, State & Local taxes whenever your tax liability less withholdings exceeds the minimum thresh-holds.
That's the rule but as with any rule - there are exceptions as well as tools to help you comply. Our job is to help you manage this in the most efficient manner we can.
If you are self-employed or typically have significant other income that is not subject to withholding then we will prepare estimates for you when we prepare your taxes. We use "safe harbor" methods to ensure that you pay in an appropriate amount that will not cause you to incur penalty or interest charges. The safe harbor is based on the previous year's tax so it may be higher or lower than the actual liability depending on your circumstances, remember it is an estimate. If your income increases during the year - you will likely owe at the end of the year but you will have met your requirements in the meantime.
The estimates we prepare also assume the same amount of withholding as in the prior year. If your withholding changes for any reason - you must let us know so we can adjust your estimates accordingly. If you do not typically pay estimates but have an unusual event (sale of an investment property, start up of a business etc) then you should also reach out to see if you need to start making estimates.
If you have a significant change in income (dramatic increase or decrease) and you would like to adjust your estimates to be in line with the current situation - you can always reach out for a projection and adjustment to the estimates.
For those of you required to make estimated payments - the due dates are generally as follows: April 15th, June 15th, September 15th and January 15th.
You can pay your estimates by mail. If you do so please use a tracking method and make sure your payment is postmarked by the due date. Even if it's postmarked timely - we have seen issues where it is not recognized as it should be and issues arise. We recommend sending your payment at least a few days ahead of the due date to avoid complications.
Payments can also be made electronically by logging into your personal account on the various government sites. If you do not have an account - you can make a direct payment to PA or IRS if you prefer - but we recommend that you register for an account.
If you pay electronically - please be sure to print/save your confirmations for future reference. Also be sure to properly code the payment to appropriate year and tax type (ie: 2023 Estimate).
As always, if you need assistance please do not hesitate to reach out.