John M. Hoffman & Associates CPAs

Frequently Asked Questions

Estimated Tax Payments

 

 "What is the penalty for underpayment?"

The penalty for underpayment or late payment is calculated like interest. If you are late on sending a payment, the sooner the payment is made, the sooner the penalty stops accruing. If you don’t make your payments, you pay this interest based penalty from when you should have made the payment until when you pay your tax.

The rate fluctuates but it is currently approximately 8% per annum.

 

• Please understand that if your circumstances are going to change, necessitating payment of (or change to) estimated taxes, you need to let us know so we can calculate what you need to pay and provide you with payment vouchers.

• Our default is to assume that your income and withholdings will be the same as the previous year and our tax software will calculate the payments accordingly, unless, based on information from you,  we tell it otherwise.