(WJW) – There’s still time for people who didn’t pay enough taxes during 2021 to avoid a surprise tax bill and other penalties, but not much.
The IRS is encouraging taxpayers who underpaid their taxes to make a quarterly estimated tax payment directly to them. The deadline to make a payment for the fourth quarter of 2021 is Jan. 18.
Most of the tax has to be paid during the year as income is earned or received, either by withholding it from paychecks, pension and some government payments or by making quarterly estimated tax payments.
Either way helps taxpayers avoid a surprise tax bill and penalties that come with it.
If someone didn’t make one of their estimated payments earlier in the year, the IRS says making the payment soon will likely lesson possible penalties or even get rid of them altogether.
Those who owed tax when they filed their 2020 tax return could face the same situation when their file their 2021 returns. The IRS said that’ll likely be the case if they didn’t avoid another shortfall by raising their withholding last year.
People who need to make a payment usually include taxpayers who previously itemized but now take the standard deduction, two wage-earner households, employees with non-wage sources of income and people with complex tax situations.
Families who got advance Child Tax Credit payments last year but don’t expect to qualify when filing their 2021 return may also need to make an estimated tax payment.
Direct estimated tax payments can be made electronically here.
For more information, go to irs.gov.