I owed more than $3,000 additional tax on my return this year and didn’t have the money to pay. How can I prevent that from happening next year?
- September 25, 2019
- David Greene
- Comments Off on I owed more than $3,000 additional tax on my return this year and didn’t have the money to pay. How can I prevent that from happening next year?
This is a good question, but I wish you had asked that question closer to April 15. If you owe more than $1,000 in additional tax on April 15, then, according to the IRS rules, you must make Estimated Tax payments during the year for the current year. This usually happens for people who are self-employed or work as independent contractors for several different companies. These Estimated Tax payments are due on April 15, June 15, September 15 and January 15 of the following year. If this is done and your income is about the same as the previous year, you should have no or very little additional tax due next April. The other thing you can do, if you work as a W-2 employee where taxes are withheld from your paycheck, is to lower your exemptions on your W-4 so more tax is withheld each pay period. For example, if you claim 2 exemptions, lower that to 0 or 1.