The IRS is encouraging and reminding taxpayers to make an estimated quarterly tax payment for 2022 by January 17. The IRS has already indicated that many taxpayers will have smaller refunds because many of the pandemic stimulus credits have expired and for those taxpayers that did not withhold enough already will likely end up with a tax liability.
The average taxpayer who is a w-2 employee will already have taxes withheld from each pay period. However, many changed withholdings due to pandemic credits and chances are that they did not revisit those to change them to pre-pandemic withholdings. This will lead to a shortfall and an estimated tax payment may be necessary.
For business owners, estimated payments are generally required throughout the year and the final opportunity is by January 17. If taxpayers do not make the payments then they can owe interest and a penalty of 0.5% on the entire amount that you owe and up to 25% total.
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