What happens if I don’t pay estimated taxes?
Short Answer: You may owe penalties and interest, and you’ll likely face a larger tax bill at year-end.
The IRS expects you to pay taxes as income is earned. If you underpay throughout the year, you can be charged penalties even if you pay the full balance later.
Common mistakes:
• Assuming you can “catch up” at tax time without consequences
• Underestimating self-employment tax
• Not adjusting payments as profit increases
What we recommend: Build estimated payments into your cash flow plan and update the estimate each quarter.
Still have questions?
If you’re not sure what applies to your situation, we can help.