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Understanding Quarterly Payments and Estimated Taxes

Staying ahead of your tax obligations can be a game-changer for your financial health. As we approach the midpoint of 2024, it's crucial to understand estimated taxes and quarterly payments to avoid any surprises and keep your finances in check. Whether you're a seasoned taxpayer or new to this process, understanding these payments is essential for financial stability and compliance.


What Are Estimated Taxes and Quarterly Payments?

Estimated taxes are periodic payments made to the IRS throughout the year on income that isn’t subject to withholding. This includes income from self-employment, interest, and importantly, income and capital gains from crypto and NFT sales. Essentially, if you earn money that isn't subject to automatic tax withholding, you'll likely need to make estimated tax payments.


Why Are Estimated Taxes Important?


Avoid Penalties: Paying your taxes quarterly helps you avoid underpayment penalties. The IRS requires taxpayers to pay taxes as they earn income. If you don’t pay enough through withholding or estimated tax payments, you could be hit with a penalty.


Cash Flow Management: Making quarterly payments can help you manage your cash flow more effectively. Instead of facing a large tax bill in April, spreading your payments throughout the year can make it easier to manage.


Peace of Mind: Staying on top of your estimated taxes ensures you won’t have any unpleasant surprises come tax season. It’s one less thing to worry about!


Key Aspects and Due Dates

Here are the some important aspects of estimated taxes and their due dates:


  • Calculation: Use Form 1040-ES to estimate your taxes. This form includes worksheets to help calculate your expected tax liability. If you need help reconciling or coming up with an estimate, our services at WAGMI Tax can simplify this process.

  • Payment Methods: You can pay online, by phone, or by mail. The IRS offers several options, including direct pay, electronic funds withdrawal, and credit or debit card payments. Just go to IRS.gov/payments and follow the directions there. Don't forget to make a payment to the state too!

  • Due Dates: Estimated tax payments are due quarterly. For 2024, the due dates are:

    • April 15, 2024 (for income earned from January 1 to March 31)

    • June 17, 2024 (for income earned from April 1 to May 31)

    • September 16, 2024 (for income earned from June 1 to August 31)

    • January 15, 2025 (for income earned from September 1 to December 31)

Ensure You're On Track

The second estimated tax payment for 2024 is due on June 17. Whether you’ve already made your first payment or need to catch up, now is the perfect time to ensure you’re on track. Assess your income and expenses so far this year, and make any necessary adjustments to your estimated tax payments.


Schedule a Consultation


Stay Ahead of the Game! Whether you're a new client looking for a free high-level overview or an existing client needing a detailed follow-up or a mid-year review, we're here to help. Schedule a time with us to examine your situation and provide tailored advice. At WAGMI Tax, we’re dedicated to making your tax experience stress-free.




Wishing you financial success and peace of mind for the rest of 2024 and beyond!


Have a great summer, WAGMI.Tax

Friends celebrating after paying their taxes

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