Estimated Tax Payment Deadline Passed—What do I do?
by Susannah McQuitty
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Originally posted September 27, 2017
The most recent quarterly estimated tax deadline for freelancers and independent contractors has already passed and—dang it—you completely forgot.
Missing one of the quarterly payments wasn’t a part of the plan, of course, so now it’s time to go back and do some damage control.
Just how much is the damage, though? After all, it’s only been a few days since the estimated taxes were due. It surely can’t be that big of a deal, right?
Is there a late fee for estimated tax payments?
Yes, there is a late fee if you pay your estimated taxes after the quarterly deadline, but you won’t see it called a “late fee” per se. The IRS doesn’t see your payment as late: They see it as an underpayment for whichever quarter the deadline covered.
For example, missing the June-to-September estimated tax payment deadline (even if you only missed it by a day), means you’ll be penalized as not paying estimated taxes for the June-to-September quarter.
Don’t panic just yet, though! There’s light at the end of the tunnel.
Should I wait until the next estimated tax deadline to make my payment?
No: You shouldn’t wait until the next estimated tax payment deadline to pay your late estimated taxes, because the underpayment penalty is calculated by looking at the amount you owed and how long it was before you paid up.
The good news is that if you pay as soon as possible after the missed deadline, you can reduce the penalty amount owed.
So how much is the penalty for late estimated tax payments?
Since the IRS looks at several different factors to figure penalty amounts, there’s not a hard-and-fast rule for how much your penalty will be. The IRS will calculate your penalty for you, but you may want to calculate it for yourself if:
- You want to request a waiver for part of the penalty,
- Your income varied throughout the year, making your payments uneven, or
- Your penalty is lower when your payments are treated as being paid when you withheld them instead of on equal amounts on the due dates.
If any of the above apply, you can use Form 2210 to calculate your penalty. Also, make sure you file your annual tax return before the April deadline next year. If you do that and pay your estimated tax underpayment penalty by the bill date, you won’t owe any interest on the penalty amount.
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