Time to Pay Uncle Sam!

Your company is profitable, congratulations! This is what you have been working so hard for – however now Uncle Sam wants his slice of the pie. Once your company has taxable income, it is important to understand the concept of paying estimated taxes. If you are filing as a sole proprietor, partner, or S Corporation shareholder you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your tax return. If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect to owe tax of $500 or more when you file your tax return. There are exceptions to paying estimated taxes, but they are specific to the entity or individual paying the tax. You should consult your tax advisor to find out if you meet one of the exceptions.

How Are Estimated Taxes Paid?
The easiest way to pay estimated tax payments to the IRS is through their Electronic Federal Tax Payment System (EFTPS). Using EFTPS, you can make payments online, schedule payments in advance and view the history of prior payments.

What Happens if I Don’t Pay?
Failure to make estimated tax payments when they are required can result in underpayment tax penalties assessed by the IRS. You should consult with your tax advisor to determine if you are required to make estimated tax payments and if so, how much those payments should be. The payments are due on specific IRS due dates depending on the type of filer.

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