Internal Revenue Service penalties for underpaying taxes have nearly tripled since 2021, putting gig economy workers and consultants at the greatest risk of having to hand over big bucks to Uncle Sam. Starting October 1, the IRS will charge 8% interest on estimated tax shortfalls, up from 3% two years ago, according to the Wall Street Journal.
Internal Revenue Service penalties for underpaying taxes have nearly tripled since 2021, putting gig economy workers and consultants at the greatest risk of having to hand over big bucks to Uncle Sam. Starting October 1, the IRS will charge 8% interest on estimated tax shortfalls, up from 3% two years ago, according to the Wall Street Journal. The penalty primarily applies to pay-as-you-go workers who do not withhold taxes and make estimated quarterly payments before filing their April taxes. Employees whose taxes are withheld are subject to the same new and higher penalties as individuals who receive higher-than-expected dividends if they do not accurately calculate and pay taxes on their additional income. You will receive it.Carla Dennis, a registered agent in La Palma, Calif. , said taxpayers who change their withholding amounts to get more cash each week can also run into trouble.
Starting in 2021, penalties for underpayment of taxes have tripled.Getty Images “This is a cascading problem. We need to give them a payment plan, create a budget, and make sure we don’t end up in this situation again,” she said. The increase in fines comes after the IRS collected $1. 8 billion in shortfall penalties from approximately 12. 2 million Americans in fiscal year 2022, the newspaper reported. According to the IRS, you can avoid this penalty if you pay at least 90% of your tax liability before filing, or if the difference is less than $1,000, whichever is greater.
To avoid fines, pay at least 90% of your tax bill before filing. Those who pay 100% of the previous year’s tax bill are exempt, but this threshold increases to 110% for individuals earning over $150,000 or married taxpayers filing separately with an income of at least $75,000. As we approach year-end, it’s essential for individuals to assess their tax situation.
Sameet Durg, a marketing executive in Warren, N.J., went through a rough patch after being hit with a four-digit underpayment penalty on top of an already high tax bill he had simply failed to pay.I learned about the fine.”Now I pay attention to my taxes all year round. I don’t want the giants to attack in April,” Doerr customer Derg told the newspaper.
