Income tax planning is critical to your financial success, but navigating our complicated federal “pay-as-you-go” income tax system can be difficult. Adding further complexity, you must understand and adapt to frequent changes in tax laws and in your personal circumstances. Each tax year, it is important to ensure that you are properly paying your federal income tax liability in a timely manner to avoid penalties. It’s not uncommon for those who have sources of non-wage income to need to make estimated tax payments throughout the year in order to avoid late payment and/or underpayment penalties.
To help you guide you through an estimated tax payment analysis, we have provided this flowchart that highlights key factors that may trigger a need to make, or increase, estimated tax payments, including:
- Self-employment, rental, and investment income
- Unexpected increases in income
- Multiple sources of income
- Under withholding from your compensation income
Do I need to start making estimated federal income tax payments?
While checklists and flowcharts can help you identify different opportunities, we are always available to meet with you to discuss your financial needs and goals, and help to identify what the best opportunities are for you.
This content is provided by Windward Private Wealth Management Inc. (“Windward” or the “Firm”) for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. No portion of this blog is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Certain information contained in the individual blog posts will be derived from sources that Windward believes to be reliable; however, the Firm does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages.
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