The Internal Revenue Service’s penalty for underpayment of taxes has nearly tripled since 2021, putting gig economy workers and consultants at greater risk of having to spend big bucks to Uncle Sam.
Starting Oct. 1, the IRS will charge 8% interest on estimated tax underpayments, up from 3% two years ago, according to The Wall Street Journal.
The penalties largely apply to delivery workers who do not have taxes withheld and do not make estimated quarterly payments before filing their taxes in April.
Workers who have taxes withheld would still be hit by the new higher penalty if they do not accurately calculate and pay taxes on any additional income, as would people who earn larger-than-expected dividend payments.
Karla Dennis, an enrolled agent in La Palma, California, said taxpayers who change their withholding to get more weekly cash could also run into trouble.
Since 2021, the penalty for underpayment of taxes has tripled. fake images
“It’s a cascading problem: putting them on a payment plan, setting a budget so they don’t find themselves in that situation again,” he said.
The fine increase came after the IRS collected $1.8 billion in underpayment penalties from about 12.2 million Americans in fiscal year 2022, the newspaper reported.
Penalties can be avoided by paying at least 90% of the tax bill before filing, or having less than $1,000 difference, whichever is greater, according to the IRS.
Penalties can be avoided by paying at least 90% of your tax bill before filing. fake images
Taxpayers who pay 100% of the previous year’s tax bill would also be saved, a figure that rises to 110% for those who earn more than $150,000 or married taxpayers who file separately and earn at least $75,000. Dollars.
“It’s a warning for people to think about as we approach the end of the year. Are you where you should be? Joseph Doerrer, a certified public accountant and certified financial planner at Mezzasalma CPA in Tinton Falls, New Jersey, told the Journal.
Sameet Durg, a marketing executive from Warren, New Jersey, learned about penalties the hard way after owing a four-figure underpayment penalty on top of an already large tax bill because he simply didn’t make any estimated payments.
“Now I pay attention to taxes all year round. I don’t want a big hit in April,” Durg, a Doerrer client, told the newspaper.
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Source: vtt.edu.vn