What Happens If You Miss A Quarterly Estimated Tax Payment?

Before we get to what happens when you miss estimated tax payments and the late penalties begin to roll in, let's make sure it's super clear how quarterly tax payments work and when quarterly taxes are due.

The gaps between quarterly taxes due dates vary, and the date each payment is due is not the same each month. With a weird schedule like that, it can be even easier to forget to pay. Or maybe you didn't forget to pay. Perhaps you had a huge car repair recently or the credit card bill was due, and you just don't have the cash at the moment. We've all been there at some point. Whatever the reason, if you missed a quarterly tax payment, what can be done? Step 1: Breathe Take a deep breath. Understand that this happens to other people from time to time, too, and you're not alone. You might be overwhelmed, and your first instinct might be to ignore the estimated tax payment late penalty the IRS is levying on you, but that's the worst course of action. Instead, do something now to address the damage done, because the penalty will only continue to grow. A tax pro can help you figure out how to pay quarterly taxes past the deadline. Step 2: Pay what you can When you're running a business, there are more business expenses than you can count, and many of them might seem more important than this one. But if you can pay something, anything, it will help. The IRS charges interest alongside the penalty for late estimated tax payments. If you can make partial payments, it will reduce the interest on the payments you owe. Get in touch with the IRS and ask for a payment plan, an option available to those who owe less than $50,000. If you can't pay everything now, this is the next best thing because, at least with a payment plan, you won't be surprised any further. Step 3: Work with the IRS Did we just say "work with the IRS?" Yes, contrary to popular belief, the IRS isn't out to get you, and even if it feels like it sometimes, their goal is not to ruin your day. They just want to collect the estimated tax payment late penalties owed to them, and they will work with you if they can help make that happen. After all, the IRS enforces the laws around taxes, and they have the power to waive fees. That's why it's worth talking to them. Show the IRS reasonable cause for missing a payment, and they will likely waive your penalty for not paying quarterly taxes. Even if they don't, their expectations will be absolutely clear to you, and maybe you can avoid another penalty for late estimated tax payments.

If you missed a quarterly tax payment, the IRS automatically charges you 0.5% of the amount that you didn't pay for each month that you don't pay, up to 25%. To find out how much you owe up to this point, you can use a tax penalty calculator. It can also tell you your IRS underpayment penalty, too, if you have one. If you eventually receive a notice from the IRS that they intend to seize your property, that 0.5% rate goes up to 1% per month. But, the penalty for late estimated tax payments goes down to 0.25% per month if you have a payment plan with the IRS (again, talk to them).

If you miss a payment, the IRS imposes a penalty for not paying quarterly taxes on time. This estimated tax payment's late penalty is calculated based on the amount owed and the length of the delay. For 2024, quarterly tax payments are due on April 15, June 17, September 16, and January 15, 2025. If you miss any of these deadlines, the penalty starts accruing from the day after the due date. The IRS charges interest on the unpaid amount, so the longer you wait, the more you’ll owe. To avoid these penalties, it’s crucial to pay estimated taxes on time. If you realize you’re late, pay as soon as possible to minimize additional charges. You can easily pay estimated taxes online using the IRS Direct Pay system or the Electronic Federal Tax Payment System (EFTPS). If you’re also late filing your return, you could face additional penalties. The IRS can charge a failure-to-file penalty, which is typically 5% of the unpaid taxes for each month your return is late, up to 25%. FlyFin’s CPAs can help avoid penalties for not paying quarterly taxes by giving expert advice on making federal estimated tax payments. Self-employed individuals can also use the built-in estimated quarterly tax calculator to calculate their payments.