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Calculating and Paying Your Estimated Quarterly Taxes

If you make quarterly estimated tax payments on income that you receive from freelance services, stock dividends, or rental properties, you want your estimates to be as accurate as possible. If you overestimate your tax obligation, you give the government an interest-free loan, but if you underestimate that liability, you may be required to pay penalties on top of the extra taxes that you will continue to owe.

Calculating and paying the right amount of estimated quarterly taxes are functions of sound tax planning and strategy. The tax attorneys at Baltimore’s Rosenberg Martin Greenberg LLP provide sound tax planning strategies that help insulate clients against the risk of exorbitant penalties and burdensome audits.

What is Your Obligation to Pay Estimated Quarterly Taxes?

Under current tax laws and IRS regulations, you are obligated to pay quarterly estimated taxes if:

  • You expect to owe at least $1,000 in taxes after you deduct all allowable credits and withholdings, and
  • Your aggregate withholdings and credits are less than the smaller of 100% of your taxes from your prior tax year or 90% of your current year’s taxes. 

Consult with a tax accountant or an experienced tax lawyer to see if you fall within these guidelines.

Go Beyond “Rule-of-Thumb” Estimated Quarterly Tax Strategies

Some sources recommend that you put aside 20% to 30% of your gross receipts for estimated quarterly tax payments, or that you at least match the amount you paid in your prior tax year. These rules of thumb are not entirely accurate.

An intelligent quarterly estimated tax strategy will consider:

  • All changes in the laws that apply to the current tax year
  • Your specific filing status and allowable deductions
  • Optimizing deposits into IRAs, health savings accounts, and other pre-tax savings plans
  • Significant one-time changes to regular cash receipts
  • Using LLCs and other corporate structures to offset business-related expenses

When to Make Estimated Quarterly Tax Payments

If you file your taxes on a calendar year basis, your final quarterly estimated tax payment for 2019 will be due and payable on January 15, 2020. In general, quarterly estimated taxes are payable every three months on or the first business day after the 15th of April, July, October, and January.

Contact Rosenberg Martin Greenberg for Planning and Strategies on Quarterly Estimated Tax Payments

The tax attorneys of Rosenberg Martin Greenberg LLP can help you to calculate your optimal estimated quarterly tax payment for the 2019 calendar year and to develop a strategy for estimated payments through 2020 and beyond. Our tax lawyers represent clients throughout the mid-Atlantic region, including in Baltimore, Annapolis, and throughout Delaware and Maryland.  Call now.

Additional Resources:

  1. www.irs.gov: Here’s How and When to Pay Estimated Taxes. https://www.irs.gov/newsroom/heres-how-and-when-to-pay-estimated-taxes
  2. www.fool.com: How to Calculate Estimated Taxes. https://www.fool.com/taxes/2017/08/05/how-to-calculate-estimated-taxes.aspx
  3. www.cbpp.org: New Tool Helps Self-Employed Calculate Estimated Tax Payments https://www.cbpp.org/blog/new-tool-helps-self-employed-calculate-estimated-tax-payments

Rosenberg Martin Greenberg

25 South Charles Street, 21st Floor MD 21201
Phone: 410-727-6600
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Rosenberg Martin Greenberg

705 Melvin Avenue Annapolis, MD 21401
Phone: 410-727-6600
Map & Directions