Being a freelancer or an independent contractor, there are chances of complications when you calculate your estimated taxes. You might miss calculating a few payments, or you could possibly miss the due date of the quarterly tax payment.

How to Calculate Your Quarterly Tax Payment

Calculate Your Quarterly Tax Payment

That’s where the tax penalty (2022) gets activated. The Internal Revenue Service (IRS) charges a penalty in case of missed quarterly taxes, detained or insufficient payments, even in the situations where you demand a refund while you file your tax return.  

Do you also get anxious hearing the term ‘Penalty’? Well, you are not alone in this. Everybody gets worried about the tax season of the year.  

Today in 2022, where the world is moving at a 5G speed, everyone loves to be independent in terms of income. Be it a woman or an adolescent, each and everyone around the globe is earning for themselves. From the point you start earning dollars, you are selected to pay some percent of your income to the federal government, which is known by the term- ‘the Income Tax’. There are two possible ways by which you are eligible to pay the taxes. 

W-2 Employee  

First, if you are working in an organization where you earn your income by means of a monthly salary, you need not worry about your quarterly tax payments. You consequently get your taxes withheld by your employer.

1099 Employee  

Second, when you are self-employed, where you owe the responsibility of your income and quarterly tax payment, you are required to calculate and pay your own taxes on a quarterly basis.  

What are the Estimated Tax Payments Due Date in 2022?  

On a regular note, Estimated tax payments are made on quarterly dates of the calendar year: 15th April, 15th June, 15th September, and 15th January. In case of any weekend or national holiday, the date gets shifted to the next business date.  

Here are the dates for the year 2022: 

  Payment Period   Due Date
  Jan. 1 to March 31    April 18, 2022
  April 1 to May 31  June 15, 2022
  June 1 to Aug. 31  Sept. 15, 2022
  Sept. 1 to Dec. 31  Jan. 17, 2022

Types of Tax Penalties in 2022  

Citizens who don’t meet their tax commitments on time might owe a penalty. The IRS issues penalties for several reasons, such as: 

  • When you miss filing your tax return on time 
  • When you do not pay any tax, you owe on time and in the right manner
  • When you don’t prepare an accurate return 
  • When you do not provide accurate information returns 

An interest percentage is also imposed on each penalty if the penalty amount is not paid completely. In this article, let’s explore the different types of penalties on tax payments in 2022.  

Underpayment Penalty 

The IRS issues an underpayment penalty when you fail to make the entire estimated tax payments.  

There are three cases where a taxpayer can avoid an underpayment penalty: 

  • If you owe less than $1,000 in tax after withholdings and credits 
  • If 90% of the tax for the current year is already being paid 
  • If 100% of the tax for the prior year is paid 

How much is the underpayment penalty?  

The penalty rate changes during each quarter. Updated by IRS, as of April 1, 2022, and through June 30, 2022, underpayment rates for taxpayers and corporations will be 4%, compounded daily. The rate on corporate underpayments that exceed $100,000 will rise to 6% for that period. 

Failure to Pay Penalty  

The IRS issues this penalty when you miss your due date and fail to pay the taxes on time.  

You can refrain from paying the ‘failure to pay penalty by mentioning the reasonable cause for the delay.  

How much is the Failure to Pay Penalty?  

  • The IRS charges 0.5% of the tax owed after missing the due date for each month. The penalty charges will never exceed 25% of the unpaid taxes.  
  • Following ten days, the IRS will give the last notification with the intention of seizing the property. From there onwards, penalty charges will increment from 0.5% to 1% each month, the tax remains unpaid.  
  • If the installment agreement is found in effect, the IRS can reduce the penalty charges to 0.25% each month. 
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Failure to File Penalty  

The IRS issues a failure-to-file penalty in case you miss the due date in filing the tax.  

How much charges need to be paid under the Failure to File Penalty?

  • For failure-to-file penalty, the IRS charges 5% of the tax that is unpaid for each month after the due date. The charges never exceed 25%. 
  • When both the penalties- Failure to File and Failure to Pay fall in the same month, the share for each penalty is- 4.5% for failure to file and 0.5% for failure to pay, making the total penalty charge 5%. 
  • After five months, if the tax remains unpaid, the Failure to File Penalty will maximize. Yet the Failure to Pay Penalty go on until the tax is paid, up to its limit of 25% of the unpaid tax as of the due date. 
  • If your tax filing is two months/60 days late, the minimum Failure to File Penalty is $435 or the total tax required on the return, whichever amount is less. 

What do the exceptions adhere to the penalties?  

Not all taxpayers are required to pay the tax penalties under serious situations. Due to various reasons mentioned below, you can wave off the burden of the penalty. 

  1. The taxpayer does not hold any tax liability for the last year. 
  2. The total tax accountability is lower than $1,000 
  3. 90% of the tax is already being paid for the current year 
  4. The taxpayer reached its retirement age.  
  5. Due to any misfortune, the taxpayer got disabled during the tax year 
  6. In case of any casualty or a disaster takes place 

Use this widget to calculate quarterly tax:

End Word – Calculate Your Quarterly Tax Payment  

However, it’s important to take care of the due dates when the tax payment season is near. In order to calculate your tax penalities in 2022 accurately, you can use the best AI-based FlyFin’s IRS penalty calculator, which helps you to figure out the exact amount of penalty you have to pay in the year. By just providing a few details, you are ready to go. You just need to provide the following information- 

  • Your status while filing the tax return, whether you are single, married and filing jointly, or married and filing separately.
  • Your current income details and the taxes paid during the previous year. 
  • Tax Deduction method: Standard or Itemized
  • Quarterly taxes paid in each quarter 

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