The IRS imposes an underpayment penalty if you don’t pay enough tax throughout the year, either through withholding or by making timely estimated tax payments. This penalty has recently surged, reaching a significant 8% interest rate. This increase particularly impacts gig workers, consultants, freelancers, and other self-employed individuals who are responsible for their own tax […]

The utilization of tax withholding can be employed to avoid penalties for underpayment of taxes. Income taxes withheld from wages are considered to be paid evenly throughout the tax year, unless the taxpayer can provide evidence of the specific dates when the amounts were actually withheld. This rule provides taxpayers with three strategies to reduce […]