Estimated Taxes are periodic payments made by individuals and businesses to fulfill their tax responsibilities throughout the year. This method prevents the need to pay taxes in one lump sum at the end of the year and ensures timely tax compliance to avoid penalties. These penalties are generally calculated as 0.5% of the unpaid amount, with a maximum cap of 25%. Additionally, the IRS imposes an annual interest rate on the outstanding balance of underpaid taxes.

Individuals with income not subject to withholding, such as self-employment or investment income, must make quarterly Estimated Taxes payments using Form 1040-ES. These payments help avoid penalties for underpayment and ensure enough funds are there to meet their tax obligations when due. The due date for Form 1040-ES depends on the tax year. For most individuals, the due dates are as follows:

• April 15: First quarter payment
• June 15: Second quarter payment
• September 15: Third quarter payment
• January 15 (of the following year): Fourth quarter payment

CPA CLINICS’ Estimated Taxes professional team offers expertise in tax laws, accurate calculations, and utilization of deductions and credits. We save time by handling the tax filing process, organizing financial records, and submitting forms correctly and on time. Our knowledge minimizes errors, audits, penalties, and fines. We also provide tax planning advice, optimize tax situations, identify savings opportunities, and offer tailored guidance for complex situations like self-employment income or investments.