IRS Reminds Taxpayers of 2024 Final Quarter Estimated Tax Payment Due Date

The IRS building in Washington, on Oct. 16, 2023. Madalina Vasiliu/The Epoch Times

The IRS alerted taxpayers who may be behind in paying their 2024 taxes that the deadline for making the fourth and final quarter estimated tax payment is on or before Jan. 15, 2025.

“Income taxes are pay-as-you-go, meaning taxpayers must pay most of their tax throughout the year in which their income is earned or received,” the agency said in a Jan. 15 statement. “Usually this is done by withholding tax from paychecks or by making quarterly estimated tax payments to the IRS (or by a combination of both).”

Quarterly estimated taxes are paid by U.S. citizens whose incomes are not subject to tax withholding, such as those who are self-employed and independent contractors. Taxpayers who fall under the category and have paid “too little tax” in 2024 should make up the deficit by Jan. 15, the agency said.

According to the IRS, people who itemized in the past but are now taking the standard deduction must make an estimated quarterly payment to avoid a potential tax bill. This also includes two wage-earners households, employees with non-wage sources of income such as dividends, those with complex tax situations, and people who failed to increase their tax withholding.

Failing to make quarterly payments on time could result in “unexpected penalties and fees” when returns are filed in the 2025 season, the IRS said.

People who have paid at least 90 percent of taxes for the 2024 tax year or 100 percent of taxes from the previous tax year may avoid underpayment penalty charges. The same is true for people who owe less than $1,000 in dues.

In some situations, the penalty “may be removed or reduced,” the IRS said. This is allowed when the underpayment “is the result of a casualty, local disaster, or other unusual circumstance,” as imposing a penalty in these circumstances would be considered not “fair,” the agency said.

The IRS reminded taxpayers that most income is taxable, including unemployment benefits, income from gig work, earnings from digital assets such as cryptocurrencies, and refund incomes. As such, when calculating estimated tax dues, people should take into account all income streams.

“Also, various financial transactions, especially late in the year, can have an unexpected tax impact. Examples include year-end and holiday bonuses, stock dividends, capital gain distributions from mutual funds, and stocks, bonds, virtual currency, real estate, or other property sold at a profit,” the agency said.

The Tax Gap, 1 Day Extension

The IRS is trying to close the tax gap—the difference between taxes owed to the government and the amount actually paid by taxpayers. For the 2022 tax year, the gap stood at $696 billion.

An October 2024 report from the Treasury Inspector General for Tax Administration cited underreporting of incomes and ensuring tax compliance from wealthy people and corporations as key challenges facing the IRS in fiscal year 2025, two issues that contribute to the tax gap.

Meanwhile, the IRS recently encouraged taxpayers to start preparations to file returns for the 2025 filing season by taking steps such as organizing documents and opening an IRS online account.

An IRS online account allows individuals to access all important tax-related information they need for the 2025 season. This includes obtaining details about their most recent tax returns, requesting identity protection PINs, receiving and viewing more than 200 IRS electronic notices, making and canceling payments, setting up payment plans, and signing tax forms such as powers of attorney.

For taxpayers who had dues on Jan. 9, the IRS has granted them an extra day, until Jan. 10, to file returns or make payments. This has been done to mark Jan. 9 as a National Day of Mourning for the recently deceased 39th president of the United States, Jimmy Carter.

The one-day extension also “applies to any federal income, payroll or excise tax deposit due on Jan. 9, 2025, including those required to be made through the Treasury Department’s Electronic Federal Tax Payment System,” the agency said.