I’m a personal finance blogger, but I’m far from flawless.
In fact, since I’ve started to write about money, I’ve found it harder to keep up with my own finances.
We are often reminded Don’t Forget To Pay Your Estimated Taxes if You Are Self-Employed. But, this month I forgot to make my estimated tax payment.
The Saga Behind My Late Estimated Quarterly Tax Payment
Due to frequent crashes last month, I had to wipe out my computer hard drive and start again from scratch. Unfortunately, in the process I lost some information that I thought I had saved. One of the things that I didn’t properly back up was my computer calendar settings.
At the start of each year, I put a reminder in my computer to help me remember to pay my estimated taxes. If you are self employed, it is very important that you pay your taxes by April 15, June 15, September 15th and January 15th (if the 15th falls on a weekend, it will be the nearest Monday after the 15th).
If your income is fairly consistent, the best thing to do is to sign up for the Electronic Federal Tax Payment System (EFTPS) and schedule all your payments for the year. Every year I’ve done that, but this year I decided to make the necessary payment manually each quarter. I’m doing it manually because of changes to my income.
On June 17th, I made an awful realization. I hadn’t made my June 15th, 2010 quarterly tax payment.
Best Course of Action When You Have A Late Estimated Tax Payment
I thought I’d find a really complicated answer when I went researching for the solution to my missed tax payment. But, it seems that the solution is quite simple.
Make the payment as soon as possible.
At the end of the year when you do your taxes, your tax program will help you determine any extra interest that may be due. You won’t be charged any fees (as long as you pay everything by the end of the year), but you may be charged some interest. The interest amount differs from year to year, but it should be somewhere between 5-8%.
Since interest is assessed based on the lateness of a payment, you should pay as soon as possible.
Either way, nothing will happen until you file taxes for the current year.
The most important consideration is that by the final payment (January 15th) you have paid the full and correct amount on time. Can’t Pay IRS Taxes in Full? Tax Payment Options
When you file your taxes at the end of the year, just file truthfully (when you actually paid and how much you paid). If there are any fees then the IRS will notify you.
How To Avoid Missing A Tax Payment
- Set a reminder in your calendar or phone.
- Important: Don’t delete or erase your information.
- I strongly suggest that people also sign up for a the EFTPS system and schedule payments. You are much less likely to forget, and you can make your payments using this fast and free method.
Get a list of the quarterly tax payments 2011.
Have any of you missed an estimated tax payment? What did you do, and what happened?