Question of the Week

What happens if I miss Estimated Tax Day?

Happy Friday, everyone! I hope you had a good week.

One last reminder that the estimated tax payment for the 3rd quarter is due today.

I know I know…it’s one of those days that no one likes to participate in. And I’m usually the bad guy to my clients when I tell them how much they should pay. But it’s much easier and less costly to take care of the payment now rather than have a super large one come next April.

What happens if you miss the deadline? That’s alright; you still have time to get the payment in. You’ll just incur a penalty. In that case, you have to pay the penalty for underpayment of the estimated tax. That penalty is .5% (or .005) of what you owe from the time you owe it (so it could be several months of that penalty coming next April).

If you’re thinking, “That penalty seems really small,” you’re right. You can earn more by keeping your money in an online savings account. And for you good savers, it’s likely more financially advantageous.

However, the problem comes for those of you who don’t save as well. You’ll incur the penalty and have to figure out a way to come up with tens of thousands of dollars you’ve already spent.

So, for most business owners, I recommend just making the payment and getting it out of the way. Your future self will thank you.

 

Quote of the Week

“Do something today that your future self will thank you for.” – Sean Patrick Flannery

 

Task of the Week

If you haven’t already, get those estimated payments in. Then, take yourself out for a nice meal, comforting drink, or relaxing massage. You deserve it!