How to Determine Your Quarterly Tax Payment and the 2022 Tax Penalty Rules

When calculating your estimated tax, there is a risk of issues if you are a freelancer or independent contractor. You can make a few calculation errors, or you might forget the quarterly tax payment’s due date. 

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The tax penalty (2022) is triggered at that point. Even if you request a refund while filing your tax return, the Internal Revenue Service (IRS) may impose a penalty for late, insufficient, or unpaid quarterly taxes.

Do you have anxiety when you hear the word “penalty”? Everyone becomes anxious during tax season each year. But you can easily avoid tax penalties if you keep a few things in mind when doing your tax filing. 

In the world of 2022, where everything is moving at 5G speed, everyone loves to have their own source of income. Everybody in the world, whether a woman or a teenager, is working for themselves. As soon as you start making money, you are required to pay a certain percentage of it to the federal government, known as “the income tax.” You have the option between two ways of paying the taxes. 

Full-time W-2 Employee

First, if you work for a company where you receive a monthly wage as compensation for your services, you do not need to be concerned about making your quarterly tax payments. It’s because you are a W-2 employee, and your taxes are withheld directly from your salary. In the 1099 vs. W-2 situation, a 1099 employee has a bigger responsibility. As a result, your employer deducts taxes from your pay.

Independent Contractors

Second, you must compute and pay your own federal income taxes on a quarterly basis if you are self-employed and are responsible for your income and quarterly tax payment. 

What is the anticipated deadline for tax payments in 2022?

Estimated tax payments are typically made on the 15th of April, June, September, and January of each year, which are the four quarterly dates. The date is changed to the following business day in the event of a weekend or a national holiday. 

Here are the dates for the year 2022:

Tax Penalties in 2022: Types

People who don’t pay their taxes on time may be subject to penalties. Penalties are imposed by the IRS for a number of reasons, including 

1. If you are not able to submit your tax return by the due date 
2. If you fail to pay any taxes, you must do so promptly and correctly. 
3. When you fail to accurately prepare your return 
4. When insufficient information is provided, results 
5. If the penalty sum is not fully paid, a percentage of interest is also added to each penalty. 

Let’s look at the various tax payment penalties in this article for 2022.

Penalty on Underpayment

When you don’t make the full amount of the projected tax payments, the IRS imposes an underpayment penalty. 

A taxpayer can escape an underpayment penalty in one of three situations: 

• If, after withholdings and credits, your tax liability is less than $1,000, 
• If 90 percent of the tax due this year has already been paid 
• Upon full payment of the prior year’s taxes 

Underpayment penalty amount

Each quarter sees a change in the penalty rate. According to the IRS, underpayment rates for people and companies will be 4%, compounded daily, beginning on April 1 and continuing through June 30. For that time, the rate for corporate underpayments above $100,000 will increase to 6%.

The IRS Failure-to-pay Penalty

When you miss your deadline and don’t make your tax payments on time, the IRS assesses this fine. By citing the acceptable reason for the delay, you are able to avoid paying the failure to pay the penalty. 

What is the Failure-to-Pay Penalty amount?

1. When the due date for tax payment is missed, the IRS assesses a penalty of 0.5% of the tax outstanding. Never will the penalty fees be more than 25% of the delinquent taxes. 
2. The IRS will issue the final notice 10 days later with the goal of taking the property. As long as the tax is not paid, penalty charges will increase from 0.5% to 1% every month. 
3. The IRS can lower the penalty rates to 0.25% each month if the installment agreement is determined to be in place. 

Penalty for Failure to File

If you fail to file your tax return before the deadline, the IRS will impose a failure-to-file penalty. 

How much of the Failure to File Penalty’s charges must be paid? 

1. The IRS will issue a failure-to-file penalty of 5% of the amount of tax not paid for each month that it is late. The fees won’t be more than 25%. 
2. The percentage for each penalty is 4.5% for failure to file and 0.5% for failure to pay when both penalties—Failure to Pay and Failure to File—fall in the same month, bringing the total penalty charge to 5%. 
3. If the tax is still outstanding after five months, the Failure to File Penalty will increase. Although the Failure to Pay Penalty only applies to the tops of 25% of the tax not paid as of the date due, it remains in effect until the tax is paid. 
4. The minimum Failure to File Penalty is $435 or the total tax due on the return, whichever is less if your tax filing is two months/60 days late.

What rules apply to the penalties’ exceptions?

Under extreme circumstances, not every taxpayer is compelled to pay tax penalties. You can bypass paying the fine for certain reasons. 

1. The individual has no outstanding tax debt from the previous year. 
2. The entire amount of tax liability is less than $1,000. 
3. For this year, 90% of the tax has already been paid. 
4. The taxpayer is now eligible for retirement. 
5. The taxpayer became incapacitated throughout the tax year for any unfortunate reason. 
6. If there are any fatalities or a calamity 

At last, calculate your quarterly tax payment

When tax payment season is approaching, it’s crucial to remember the deadlines. Use the best AI-based FlyFin’s IRS tax penalty calculator to determine the precise amount of penalties you must pay in the year in order to calculate your tax penalties in 2022. You only need to provide a few details to be set up. You only need to supply the information listed below: 

1. Whether you are single, married and filing jointly, or married and filing separately when you file your tax return. 
2. Information about your current income and the taxes you paid in the preceding tax year. 
3. Method of tax deduction: Itemized or Standard 
4. each quarter’s payment of quarterly taxes