It’s Tax Time! 1st Quarter Estimated Taxes are Due

It's Tax Time! 1st Quarter Estimated Taxes are Due.

Now is the time to file your taxes and make your estimated tax payment.

Both your individual tax return AND first quarter estimated tax payment are due by Tuesday, April 18th. Here is what you need to know.

First quarter due date: Tuesday, April 18, 2023

The Estimated Tax Payment Rule

You are required to withhold or prepay throughout the 2023 tax year at least 90 percent of your 2023 total tax bill, or 100 percent of your 2022 federal tax bill.* A quick look at your 2022 tax return and a projection of your 2023 tax obligation can help determine if a quarterly payment might be necessary in addition to what is being withheld from any paychecks.

Things to Consider

Underpayment penalty. If you do not have proper tax withholdings throughout the year, you could be subject to an underpayment penalty. A quick payment at the end of the year may not be enough to avoid an underpayment penalty.
W-2 withholdings have special treatment. A W-2 withholding payment can be made at any time during the year and be treated as if it was made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 wage withholdings to make up the difference.
Self-employed. In addition to paying income taxes, self-employed workers must also pay Social Security and Medicare taxes. Creating and funding a savings account for this purpose can help avoid the cash flow hit each quarter to pay your estimated taxes.
Use your refund? An alternative option to pay your 2023 first quarter estimated tax is to apply some or all of your 2022 tax refund.
Pay more in the first quarter. By paying a little more than necessary in the first quarter, you can be in a position to adjust future estimated tax payments downward later this year if your 2023 tax obligation trends lower than you originally thought.
Not sure if you need to make a quarterly payment? Take a quick look at your 2022 tax return to see the amount of tax you paid last year. Divide this amount by the number of paychecks you receive each year and compare to your most recent paycheck. Is enough being withheld from each paycheck? Talk to your employer if you decide you need to adjust your withholdings to cover your 2023 tax bill.

*If your income is more than $150,000 ($75,000 if married filing separate), you must pay 110 percent of your 2022 tax obligation to avoid an underpayment penalty on your 2023 tax return.

Article from CK Books & Billing. This article has been reprinted with permission from CK Books & Billing

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It’s Tax Time! 1st Quarter Estimated Taxes are Due