Didnt Pay First Quarterly Estimate, Business Finances Changed

[QSDConsulting]

At the beginning of this year I expected to owe well under $1000 in taxes (even doubling my previous year's taxes wouldn't result in owing this much) but things have drastically changed. I now expect that I will owe well over $1000. I am wondering what I should do in regards to quarterly estimates. Should I pay the March 1st one now for what I expect to make this year? If so what type of penalties should I expect for being so late?

My other issue is that a quarter of my estimate is more money than the business has in it at this time.

Thanks,
Dan

[llworking]

At the beginning of this year I expected to owe well under $1000 in taxes (even doubling my previous year's taxes wouldn't result in owing this much) but things have drastically changed. I now expect that I will owe well over $1000. I am wondering what I should do in regards to quarterly estimates. Should I pay the March 1st one now for what I expect to make this year? If so what type of penalties should I expect for being so late?

My other issue is that a quarter of my estimate is more money than the business has in it at this time.

Thanks,
Dan

Are you talking about state or federal estimates. The federal 1st quarter estimate was due 4/15 and as far as I know states follow that same schedule.

Therefore, you would only be a little bit late and any penalty would be minimal if you make the estimate fairly soon.

Honestly though, the feds don't get too up in arms about estimates if they happen to vary a bit from period to period. For example, if you pay 100.00 for the first quarter and then 300.00 for each suceeding quarter, its unlikely that you would be penalized as long as the total estimates were within the amounts required.

[QSDConsulting]

Are you talking about state or federal estimates. The federal 1st quarter estimate was due 4/15 and as far as I know states follow that same schedule.

I am talking about federal.

Therefore, you would only be a little bit late and any penalty would be minimal if you make the estimate fairly soon.

Honestly though, the feds don't get too up in arms about estimates if they happen to vary a bit from period to period. For example, if you pay 100.00 for the first quarter and then 300.00 for each suceeding quarter, its unlikely that you would be penalized as long as the total estimates were within the amounts required.

The variance is not small. I dont want to give away my finances on a public forum but until about a week ago I didn't expect to be within the threshold of having to report and now I am going to be very significantly above it. I'm going to earn about 90% of my income in May-Dec.

[Bubba Jimmy]

There are two methods for paying estimated tax payments. There's the regular installment method and the annualized method. The regular method is for people whose income doesn't vary much, so they pay 1/4 of their estimated total each quarter. But if your income varies, you should use the annualized method (pub. 505 or the worksheet for 1040-ES) to determine the amount required for each quarter. If you don't make your income until the 3rd and 4th quarters, you don't have to make payments in the 1st and 2nd quarter. Our system is a "pay as you earn" system.