IRS penalty for underpaying estimated taxes jumps to 8% of the shortfall from 3% two years ago - with freelancers and the self-employed most at risk
The IRS penalty for underpayment of estimated taxes is up sharply this year, with self-employed and freelance workers at the biggest risk of getting hit.
The penalty, calculated quarterly based on the Federal Reserve's benchmark rate, hit 8 percent on October 1, up from just 3 percent in early 2021, when Fed rates were near zero.
The penalty rate applies to shortfalls in estimated taxes, which self-employed workers pay the IRS quarterly based on their earnings for the period.
Employees who have income taxes deducted from their paychecks generally do not have to pay estimated taxes, and are unlikely to be impacted by the new fine.
But for the self-employed, the new higher fine is yet another consequence of the Fed's aggressive rate hikes, which the central bank has deployed to battle inflation.
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The IRS hates productive people.
It's almost like (fake) elections have consequences.
Now aggressively go after the student loan default crowd.
The IRS penalty for underpayment of estimated taxes is up sharply this year, with self-employed and freelance workers at the biggest risk of getting hit.
The penalty, calculated quarterly based on the Federal Reserve's benchmark rate, hit 8 percent on October 1, up from just 3 percent in early 2021, when Fed rates were near zero.
The penalty rate applies to shortfalls in estimated taxes, which self-employed workers pay the IRS quarterly based on their earnings for the period.
Employees who have income taxes deducted from their paychecks generally do not have to pay estimated taxes, and are unlikely to be impacted by the new fine.
But for the self-employed, the new higher fine is yet another consequence of the Fed's aggressive rate hikes, which the central bank has deployed to battle inflation.
IRS unveils huge fine increase for underpayment of estimated taxes
The penalty, calculated quarterly based on the Federal Reserve's benchmark rate, hit 8 percent on October 1, up from just 3 percent in early 2021, when Fed rates were near zero.
The IRS hates productive people.
It's almost like (fake) elections have consequences.
Now aggressively go after the student loan default crowd.
