Uncle Sam Wants You... to Pay Your Taxes

Anna Skinner, Senior Accountant

I was reminded the other day that our Federal income tax and most State income taxes are pay-as-you-go taxes. That means you must pay the tax as you earn or receive income during the year. Individuals pay two ways: with payroll tax withholdings and by making estimated tax payments. If you are an employee, then your withholdings are sent to the IRS and your employer’s State by your employer. You do not have to do anything except have the taxes withheld from your paycheck. If you are not an employee, chances are you make estimated tax payments and remit them to the IRS and your State throughout the year. Sometimes employed individuals also make estimated payments.

I am discussing the estimated payments. If you have been making them, then I am encouraging you to continue to make them timely. It is necessary to avoid penalties for underpaying your tax liability. Estimated payments from individuals are due four times a year; April 15th, June 15th, September 15th, and January 15th. They are paid with a payment coupon. Anyone can make an estimated payment; Uncle Sam and your State never refuse any funds; however, some individuals must make estimated payments to avoid penalty and interest.

It has been my experience that most of the individuals who have to make estimated payments do not like to do so. They feel that it is an inconvenience and they can never remember when the funds are due, even though they have preprinted coupons with the date due on them. Most of the coupons are left in the folder with the prior year’s return. When you get your tax return package, you usually file the returns and put the estimated coupons somewhere safe to be used later on. Then you forget later in the year to look for them or you have stored them so well you cannot find them.

I am challenging you to take a pro active approach for 2010. Take your coupons and put them in with your other bills to be paid, or add them to your tickler file, or even put the due dates on your calendar. Maybe there is even an app for that! Please remember to make your payments. It is also a good idea to keep a running list of how much and when you make your payments so that you can give it to your accountant next year when preparing your return.
If you know that you are scheduled to make estimated payments and cannot find your coupons, give us a call and we can provide them to you.

The first payment for 2010 is due April 15, 2010.