The United States has a “pay-as-you-go” tax system. Rather than waiting for the end of the year to get their taxes, the government wants taxpayers to pay smaller portions of tax throughout the year. For most wage-earners, they don’t even need to think about it- Their employer takes money out of their paycheck and pays the tax to the government on a monthly or weekly basis.
But what about self-employed individuals (like members of the Clergy)? IRS expects them to make quarterly estimated payments of their taxes. For 2019, these quarterly payments are due on April 15th, June 17th, September 16th and January 15th.
If you fail to make these quarterly estimates timely, IRS can assess an estimated tax penalty. The penalty rate is determined quarterly and the amount owed is based on how many days the payments were late.
While calculating the penalty can be complex, avoiding the penalty is fairly simple. In order to avoid the estimated tax penalty, make sure to make your estimated tax payments timely. If you mail your payments, it’s a good idea to send them by certified mail so you have proof that the payments were sent timely. If you make payments online, you can get an electronic receipt showing when the payments were made.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
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