Federal Q2 Estimated Tax Payment Due June 17th, 2019
Your 2nd quarter income estimated tax payment is due June 17th. Your safe harbor Q2 payment is: $XXXX. This is under the assumption you made your recommended Q1 payment of $XXXX.
You have two options on what you pay in:
Safe Harbor which is based on your prior year tax and
Calculated estimate tax based on your year-to-date 2019 figures
We generally recommend paying in the lesser of the two and putting the higher amount in a tax savings account as a reserve. This way you earn the interest and not the IRS.
Option #1: Safe Harbor based on 2018
Pros: Easy, cheap, fast
Cons: Less accurate, may have a balance due at tax time, or be overpaid
Option #2: Actual based on 2019
Pros: More accurate, better idea of what to pay-in or save for cash flow purposes
Cons: More involved, additional engagement
Make the payment directly at irs.gov/directpay
Upload copies of your payment confirmation to your Client Portal
General recommendations for estimated taxes:
Have a separate income tax savings account
Put 30% to 40% of your net income after expenses, in it each month after you
review your profit and loss or income statement
The total in the savings account should match what you’ve made multiplied by
30% to 40%
If you establish this habit now, you’ll stay ahead of any need for payment plans or
If you haven’t started yet, start now and pay what you can
Q3 is due September 15th and Q4 is due January 15th, 2020.
If you don’t pay in for your quarterly taxes (and you are supposed to), you could end up owing the IRS an underpayment penalty in addition to a less manageable tax bill during tax time. The penalty depends on how much you owe and the length of time that you owed it to the IRS. If you miss a payment, plan to catch up next quarter.
NOTE: This is only for the IRS regarding your federal income taxes. Your state income tax is in addition to this if you are subject to it.
If you need any help making these payments, give us a call at 206-474-6948. If your income has changed substantially from 2018, or you’ve had a major life event, you may want to discuss having us calculate an actual projection. Book a time here to discuss.
To your success,
Timber Tax Team