As we approach the end of the year, it’s important to remember that the IRS doesn’t operate on a “see you next April” system. Federal taxes are pay-as-you-go, which means the IRS expects your tax payments throughout the year.

If your estimated payments have slipped behind, you may face an underpayment penalty — something no one enjoys discovering in January.

Here’s what the IRS looks for:

  • 90% of this year’s total tax paid, or
  • 100% of last year’s total tax paid

If you miss these thresholds, the IRS calculates a penalty based on how much you underpaid, how long it was unpaid, and current interest rates.

A simple check before December 31 can protect you from unnecessary penalties and help you start the new year on solid ground.

If you’d like help reviewing your withholdings or estimated payments, I’m here to guide you. A few minutes now can save you stress later — and keep you tax-ready year-round.

Posted in Tax Filing, Tax Planning, Tax Problems