If you have income that isn’t subject to withholding taxes, then you probably should be paying estimated taxes. Most people satisfy their tax obligations through payroll withholding but when that doesn’t happen; you have to get the money to the government yourself.
It doesn’t matter whether the untaxed money comes from a job, investments, alimony or prizes you’ve won. If the government doesn’t get his share close to the time you received the money, you could end up owing not only taxes but also penalties and interest.
The U.S. tax system is on a pay-taxes-as-you-earn goal, so the Treasury’s goal is to get any estimated taxes regularly. However, many times, people who receive a financial windfall immediately spend the proceeds without any thought to the tax implications. Even people who earn a steady stream of money that isn’t taxed upfront tend to put off filing estimated taxes because they need the cash and figure they’ll settle things with the government later. Ignoring your estimated tax duties is not wise because it could lead to an underpaid tax bill.
Pay your estimates online- IRS @ www.EFTPS.com, FTB @ www.ftb.ca.gov
