Dr. Friday clarifies that estimated tax payments are not optional but required to avoid penalties. She explains how failure to pay on time results in monthly penalties from the IRS.
Transcript:
G’day, I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to www.drfriday.com. This is a one-minute moment.
Let’s talk about estimated tax payments. So often people come in and think it’s some sort of voluntary thing that all of us are doing—as if we would voluntarily want to pay money before we had to pay it! That’s not the case. We don’t want to pay penalties. There is an exact penalty for failure to make estimated tax payments. So you make a choice: You can pay 0.5% every month that you forget to do it or choose not to, or you can pay it on time. I kind of like to get the IRS out of my bank as soon as possible, so I make my payments. But people make that choice. Just understand there’s a penalty for not doing it.
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