How to Avoid IRS Penalties and Interest for Underpayment or Late Payment of Taxes

This is an important notice regarding recent increases in IRS penalties and interest for underpayment of estimated taxes and late tax payments. To help you avoid unnessary charges in future tax years, please review the following updated guidance:

1. Quarterly Estimated Payments:
   We strongly recommend making estimated payments on a quarterly basis throughout the year to prevent interest and penalties.
2. Tax Payment Deadline:
   To avoid peanlties (but not interest), you must pay at least 110% of your prior year's tax liability or 90% of your current year's tax liability by April 15. The extension to October 15 only extends the time to file your return, not the time to pay your taxes. Any tax due must be paid by April 15.
3. Interest and Penalties:
   Failing to pay on time may result in approximately 8% interest and a 6% late payment penalty per year - a total estimated annual rate of about 14%.