It’s not enough if you pay your income tax to Uncle Sam, it’s also a question of when the tax is paid. You could be assessed an “estimated tax” interest charge penalty if you don’t fork over the required tax in a timely fashion. The penalty is equal to the going interest charge rate for other tax underpayments.
Fortunately, you can avoid any penalties if you qualify under one of three safe-harbor methods. The new economic stimulus law eases one of these safe harbors for qualified small business owners.
Strategy: Use the safe-harbor method that suits you best. You might even switch midway through the year. There’s nothing in the tax law requiring you to stick with the same method through thick and thin.
Some taxpayers simply like the idea of overpaying the IRS during the year and getting back a big fat tax refund the following year. But that effectively gives the government an interest-free loan. In this uncertain...(register to read more)
- How to Fire an Employee the Legal Way: 6 Termination Guidelines
- 10 Secrets to an Effective Performance Review
- Small Business Tax Deduction Strategies
- Vow to cut company health care costs
- Is there a tax cap on deductible pay?
- Section 179 bumps against income ceiling
- Max out results from your employee-referral program