“I didn’t pay my quarterly taxes. What happens Now?” sounds familiar.
Unpaid taxes are a burden for any business; unfortunately, even the best entrepreneurs encounter them. The effect is the same whether you’ve made an honest mistake or tend to underestimate your quarterly taxes.
To avoid experiencing severe consequences down the line of not doing taxes, you should take immediate steps to resolve the issue.
Follow this article to find out what happens when you are not doing taxes.
Who Has to Pay Estimated Taxes?
Estimated tax payments are made quarterly, on a schedule set by the IRS. Self-employed individuals who earn higher amounts from various investments are expected to make estimated tax payments.
You don’t have to pay estimated tax for the current year if you meet the following conditions:
You had no tax liability for the prior year, you were a U.S. citizen or resident for the whole year, and your last tax year covered 12 months.
You experienced an unexpected, unusual, or noteworthy event, such as a casualty or disaster. You retired 62 or older in the previous or current tax year or had reasonable cause for not making the payment.
What Happens If I Didn’t Pay My Quarterly Taxes?
If you have unfiled tax returns, the IRS fines you interest and penalties. If you forget, it does not follow that they will. In the beginning, the IRS will most likely deduct a tax or a percentage of what you owe.
The percentage increases each month that you do not pay your quarterly estimated tax. They can charge you the maximum penalty of 25%, but don’t think you’re out of the woods just because you’ve reached that figure.
If you leave it that way and don’t show interest in paying the estimated tax, you may end up in legal trouble. Many people leave it until the next due date. However, the more they push it back, the more they will have to pay.
If you don’t pay, the amount won’t be reset. By the time the next quarter comes around, you’ll probably have a significant penalty; you’ll barely be able to handle it.
Theoretically, you end up having to pay the following amounts: the entire amount of tax due, penalties (0.5 percent of the tax due per month), and interest (currently 3 percent of unpaid tax per. year)
When Do I Pay the Quarterly Taxes?
Keep in mind the deadlines for filing quarterly taxes. Paying early is preferable to paying late. Here are the dates:
- April 15
- June 15
- September 15
- January 15 of the following year
The IRS takes these deadlines very seriously and expects you to pay estimated taxes on time. The only exception is if the date is a bank holiday.
In that case, the payment must be made on the first business day, which is not a holiday or a weekend.
Catch Up on Tax Payments
Next time, I hope you’ll be in a different situation, and you don’t have to say, “I didn’t pay my quarterly taxes.”
However, if this occurs, do not become alarmed. Begin paying as soon as you remember.
If your plate is clean by filing your tax return, you should have no problems the following tax year.
Make sure you explore the rest of our content to find answers to any other questions that you might have!