Do you need to make an estimated income tax payment? If you do need to make an estimated payment for the fourth quarter of 2021 the deadline to make the payment is on January 18th.
If you don’t have sufficient payments made to the IRS during the year you could be hit with a penalty.
Most of us make our payments during the year through our payroll deductions. But if you had outside income — for example you sold stock or cryptocurrency for a big profit — you may need to make an additional payment.
Remember the tax system is a pay-as-you-go system. If you don’t pay in enough you can be penalized. And remember January 18th is the deadline to catch up on those underpayments.
This year, as many as 25 million Americans could be in for a surprise — they could owe serious money to the IRS because they collected unemployment insurance benefits during the pandemic.
Unemployment insurance benefits are taxable. If you had withholding — well good for you. You might not owe the IRS anything. But many recipients of unemployment benefits during the pandemic did not have withholding because they lost their jobs and they needed all of that unemployment money that came each week.
Well now it’s time to pay the piper — yes, it’s time to pay the IRS.
And guess what — there is no forgiveness of the unemployment benefits in 2021. In 2020 Congress pushed through legislation so you didn’t have to pay taxes on about ten thousand dollars of your unemployment money. But there is no such deal for the unemployment money paid in 2021.
You might owe the IRS a good chunk of cash this year.
Remember, it’s always best to consult with a tax professional. And call my friends at Legal Tax Defense for a free consultation.
Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues.