Do I Need To Start Making Estimated Federal Income Tax Payments?
Income tax planning is critical to your financial success. Navigating our complicated federal pay-as-you-go income tax system can be difficult. Adding further complexity, you must understand and adapt to changes in tax laws and your personal circumstances. In each tax year, it is important to ensure that you are properly paying your federal income tax liability in order to avoid penalties. Frequently, you may need to make estimated payments to avoid penalties for late payments and/or underpayments.
To help you through an estimated payment analysis, we have created this flowchart. The decision points identify factors that may trigger a need to make or increase estimated payments, including:
- Self-employment, rental, and investment income
- Unexpected increases in income
- Multiple sources of income