Tax Advanced Team Member Christina Manis and Tax Principal Kevin Hickman answer the question, Now that tax season has officially passed, what should be one of the top items on my 2016 tax to-do list?
Check out the video here.
It seems that tax season never really ends especially with the filing of extensions.? The first thing that should be on your 2016 tax to-do list is the evaluation of the need to make quarterly estimated payments.
Quarterly estimated payments are designed to pay an amount of tax during the year that closely resembles your tax liability reflected on your 2015 tax return.
If your income is over certain thresholds and you owed tax with your return, you should consider either increasing withholding from your employer or make quarterly estimated payments.? The first of those payments are due on June 15.
The motivation for making quarterly estimated payments is to mitigate the likelihood of underpayment penalties charged by the IRS.? The general rule to accomplish this is to pay in an amount equal to your prior year tax liability.
If your income is more than $75,000 or $150,000 (depending on your filing status), that threshold could be 110 percent of your 2015 tax liability.
If you need to make quarterly estimated payments, there are some other options available to you.? As we mentioned, you could increase your withholding or compute your actual tax liability each quarter and pay that amount.
Crosslin is happy to help with your tax projections for quarterly payments or with any other tax planning and compliance matters.