ESTIMATED TAXES

After you have completed the task of filing late returns, if necessary, you must be current on your estimated taxes if you are self-employed.  If you are an employee you must be having the right federal income tax withholding being taking out of your pay or additional amounts if you need to “catch up.”

You must file IRS form W-4 with your employer so they can determine what amounts to withhold from your pay check for federal taxes.  However, it is your responsibility to make sure the right amount is being withheld.  Your employer has a copy of the federal withholding tax table and it is a good idea to compare your withholdings from this table.  Many employees think they are having the right amount withheld from their paychecks because they submitted a W-4 form only to be surprised at tax time to find they still owe lots of money.  Not being able to pay your current tax liability on time may invalidate your tax settlement.

Make sure your pay estimated taxes quarterly if you are self-employed.  Making one large payment in the fourth quarter will result in additional tax assessments.