WASHINGTON, D.C. — The Internal Revenue Service (IRS) is reminding taxpayers to make their fourth quarter estimated tax payment by January 15, 2025, if they underpaid federal taxes in 2024. The agency emphasizes the importance of staying current with tax obligations to avoid penalties and unexpected bills during the annual filing process.
The U.S. tax system operates on a pay-as-you-go basis, requiring most individuals to pay taxes as income is earned throughout the year. For those whose income is not subject to payroll withholding—such as independent contractors, self-employed individuals, or investors—quarterly payments to the IRS are essential.
Taxpayers who owed money when filing their previous tax return should also consider making an estimated payment to avoid repeating the same situation. This is particularly relevant for individuals who experienced changes in their tax circumstances, such as switching from itemizing deductions to taking the standard deduction, earning non-wage income, or failing to adjust tax withholding.
The IRS stresses that nearly all forms of income are taxable. This includes wages, dividends, unemployment benefits, income from side jobs, and earnings from digital assets like cryptocurrency and NFTs. Year-end financial events, such as bonuses, stock dividends, and capital gains, may also increase a taxpayer’s liability.
Failing to make required payments can result in penalties, interest, and an unexpected tax bill when returns are filed. The IRS encourages taxpayers to carefully account for all sources of income when calculating their estimated payment and recommends using the tools available on its website to assist with this process.
With the January 15 deadline fast approaching, the IRS hopes eligible taxpayers act promptly to stay compliant and avoid financial consequences.
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