You get an overpayment credit when your tax payments exceed what you owe. You'll automatically receive a refund of the credit. However, you can ask us to apply the credit as an advance payment towards next year's taxes instead of sending it to you as a refund.
You will receive an overpayment amount as a refund. The IRS won't be sending out a notification to let you know you made an overpayment on taxes. Freelancers, independent contractors and gig workers need to make quarterly estimated tax payments if they meet the requirements.
If the payments made exceed the amount of tax, then the amount of the overpayment is entered on the overpaid line in the Refund section of Form 1040. Taxpayers can choose to apply any portion of their overpayment to the following tax year or receive their refund as a check or direct deposit.
Is it better to underpay or overpay taxes? Generally speaking, it's better to overpay your taxes rather than underpay. A tax overpayment will result in a refund at the end of the year, which means your taxes are paid in full, and you receive the difference as a refund.
Answer: Generally, if you determine you need to make estimated tax payments for estimated income tax and estimated self-employment tax, you can make quarterly estimated tax payments or pay all of the amount due on the first quarterly payment due date. Special rules apply to farmers and fishermen.
If the Adjusted Gross Income (AGI) on your previous year's return is over $150,000 (over $75,000 if you are married filing separately), you must pay the lower of 90% of the tax shown on the current year's return or 110% of the tax shown on the return for the previous year.
Pay all of your estimated tax by January 16, 2024. File your 2023 Form 1040 or 1040-SR by March 1, 2024, and pay the total tax due. In this case, 2023 estimated tax payments aren't required to avoid a penalty.
Estimating estimated taxes
If you underestimate, you may be penalized for the number of days it remains unpaid. The simple way to ensure that you pay what you owe is to pay at least 100% of the tax you paid the previous year, unless you have some indication you are going to earn significantly less.
Estimated tax payments should be made as your income is earned, and the IRS sets deadlines for collection on a quarterly basis. These dates don't coincide with regular calendar quarters, so plan ahead. You can also make payments more often if you like, says Bess Kane, a CPA in San Mateo, California.
You should figure out the amount of tax you have underpaid. Keep in mind this form contains both a short and regular method for determining your penalty. You can let the IRS figure your penalty if you didn't withhold enough tax by the end of the year.
If you claimed 0 and still owe taxes, chances are you added “married” to your W4 form. When you claim 0 in allowances, it seems as if you are the only one who earns and that your spouse does not. Then, when both of you earn, and the amount reaches the 25% tax bracket, the amount of tax sent is not enough.
For issues related to duplicate payments, it would be wise to contact the IRS department that handles billing issues (1-800-829-1040) or the IRS taxpayer advocate service for more complex issues (1-877-777-4778).
You appear to be using Online Deluxe Edition, which is a paid version--$60 for Federal and $50 for state, and if you choose to pay the fees out of your Federal refund, there is an additional $40 service fee ($45 for California filers.) So if you chose those 3 things, that would account for your $150 in fees.
Tax extensions are generally six months in length. Any overpayment will be refunded when you file your tax return. An extension for your filing deadline does not extend your payment deadline. Securing an extension will give you until October, to file the previous year's tax returns, as opposed to April.
You can also modify or cancel your payment up to two business days before your scheduled payment date. You can access your federal tax account information through a secure login at Your Online Account.
If you miss the deadline for a quarterly tax payment, the IRS automatically charges you 0.5% of the amount that you didn't pay for each month that you don't pay, up to 25%. To find out how much you owe up to this point, you can use a tax penalty calculator.
One of those rules is that individuals must pay 90% of taxes as they earn or receive income during the year (not when their income tax return is due), either through withholding, estimated tax payments, or a combination of the two.
If you didn't pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax.
However, taxes aren't necessarily a bad thing. On some level, your taxes fund services that benefit the public such as Social Security and Medicare. Paying too much, however, amounts to an interest-free loan over and above your fair share and may leave you with a higher burden than what the government assessed you.
Penalty. 0.5% of the unpaid tax for each month or part of the month it's unpaid not to exceed 40 months (monthly).
For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you don't pay enough tax by the due date of each payment period, you may be charged a penalty even if you're due a refund when you file your income tax return at the end of the year.
Failure to pay proper estimated tax
If you owe more than $1,000 when you calculate your taxes, you could be subject to an underpayment of estimated tax penalty. To avoid this you should make payments throughout the year via tax withholding from your paycheck or estimated quarterly payments, or both.
Estimated Taxes: Making Quarterly Payments
Normally, if you owe income taxes you have to pay by the April filing deadline (in 2024, the filing deadline is April 15) to avoid a penalty. But that's not the case with estimated taxes. These are due four times during the year: in January, April, June and September.
Yes, at the end of your state return, we'll ask if you want to make estimated tax payments and help you calculate the amount. We'll even generate the payment vouchers for you to print along with your return.