I didn't pay any quarterly taxes b/c I didn't really have the cash at the time (trying to pay off dept). I know this wasn't smart and going to pay by the last quarter. What kind of penalties can I expect?
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IRS Payroll Penalties
From IRS Publication 15
http://www.irs.gov/publications/p15/ar02.html#d0e2398 for additional information.Deposit Penalties
Penalties may apply if you do not make required deposits on time, if you make deposits for less than the required amount, or if you do not use EFTPS when required. The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. For amounts not properly or timely deposited, the penalty rates are as follows.
2% - Deposits made 1 to 5 days late.
5% - Deposits made 6 to 15 days late.
10% - Deposits made 16 or more days late. Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due.
10% - Deposits made at an unauthorized financial institution, paid directly to the IRS, or paid with your tax return. But see Depositing without an EIN on page 22 and Payment with return on page 18 for exceptions.
10% - Amounts subject to electronic deposit requirements but not deposited using EFTPS.
15% - Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier.
Note.
Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability
You will have to refer to your State to see also what their penalties are.
Also there will be a penalty for the Form 940 (unemployment tax)
*****Sorry, after re-reading your post you were probably talking about Quarterly estimated payments. We are currently processing quarterly payroll reports and deposits, so you can tell where my mind is at. We refer to payroll as quarterly's and the 1040 es payments as estimated payments. My oops and assumption!
John and Snaggletooth, gave you some good info, if it relates to the quarterly estimated payments (1040ES). Your penalties for your non payment or late payment of estimated payments (1040 ES) not being paid is based on your prior year tax liability , your current tax liability and when the estimated payments are made. -
1040 ES penalties
I assume your question was about 1040 ES quarterly payments. The penalties for not paying them in quarterly are very little as long as they are paid by Jan 15. The penalties are calculated on form 2210 when the 1040 is filed at year-end (on the honor system._ If you missed the 1st 3 Qtrs., and you don't bother with the 2210, and pay by Jan 15, you won't hear from IRS; but it's best not to tell our clients this so they don't abuse the system.Comment
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Quarterly Shortage
IRS will calculate a penalty on each quarter missed or tardy, even though a taxpayer is totally paid by January 15th - even if they have a refund by April 15th! Incredible how their computers don't miss a single quarter. However, the penalty is not terribly severe, and amounts approximately to a decent return charged by a bank on the same money.
If you have payroll taxes, however, the rules change. The IRS can, (and WILL if you don't make arrangements) apply any payment to the oldest liability, that way forcing you to incur penalties on amounts that you may intend to pay currently. Penalties on payroll taxes, as mentioned by S T, are horrendous, and if this is the case, you'd best contact the service and work out something with them.
You mentioned early in your post that you were already paying off the IRS for an earlier assessment. I'm sure you've been nagged at by others, but I would encourage you to get your arms around taxes before other expenses. Taxes are like cockroaches -- just because you don't have to deal with them in the daylight doesn't mean they're not there.
Welcome to the board - we'll help as much as we can.Comment
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