Posted by American Life Insurance GuideEditor's note:In the U.S,insurance broker, Real estate brokers, and practitioners in the self-employed industry mostly take 1099 forms to declare taxes.Many practitioners find a certified public accountant once a year, then calculate the annual income and complete the declaration before April 1.Although this behavior cannot be said to be wrong, for tax filers, one of the requirements in the U.S. tax may have been overlooked, that is, the IRS requires the tax filer to pay taxes in advance under certain circumstances. Otherwise, the IRS will directly impose a fine, and Directly added to the tax form,Many brokers may not know that they have been paying fines.In the view of accountants, such fines are not worth it.Today we invited April Chen, a certified public accountant in the community, to talk aboutWhat is estimated tax (also known as: prepaid tax, prepaid tax), and estimated tax penalty.And how to avoid being confused.
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The picture above is the last two lines of the second page of tax form 1040.I don’t know how many taxpayers noticed line 23 when they saw their tax forms. Estimated Tax PenaltyIt.
The picture above is the last two lines of the second page of tax form 1040.I don’t know how many taxpayers noticed line 23 when they saw their tax forms.HelpingAmerican Life Insurance GuideIn the communitybrokerWhen I checked last year’s tax form, I found that the other party did not know that there wasAdvance tax penaltyThis one.This is also a lot of taxpayers, especiallyBrokers who take the 1099 form can easily overlook the problem.
As a freelance broker, in addition to paying taxes on personal income, you also need to pay 15.3% Social Security Tax and Medicare Tax for freelance income.In the above case, the fine hidden in the tax table is $314. Although it is not a lot, it is equivalent to a dinner for family and friends, a ticket for a short trip, a month's premium, or nearly 100 cups of coffee.
Let's share with you how to avoid being "flagged" by the Internal Revenue Service (IRS).
What is the advance tax penalty?
The US Internal Revenue Service stipulates that if you expect to pay taxes of $1,000 or more when you file your tax return, you generally need to pay advance tax.You can withhold or pay advance taxes by earning wages, or by yourself through Form 1040ES.If you fail to pay enough taxes through withholding, you may be fined.This is the advance tax penalty.
How to avoid prepayment fines?
1. Know your income and prepare in advance
Understand the income that you may have during the year, the interest and dividends you may receive,Freelance (broker industry) income, Capital gains and other income,Pay advance tax on average every quarter in advance.
2. How much prepaid taxes need to be paid to be safe enough
Generally speaking, the tax owed by taxpayers
-
- a): Less than $1,000, or
- b): At least 90% of the tax paid in the tax year, or
- c): From the previous year's tax form100%Tax; for adjusted gross income (Adjusted Gross Income) achieve$150,000Tax familySpeaking,
You need to pay the previous year’s tax in advance 110%，
You can avoid the prepayment of tax fines.
Since the new tax law came into effect in 2018, the IRS has reduced the threshold required for the 2018 prepayment tax penalty reduction from 90% of the annual tax to 80%.
How to pay advance tax
Prepayment of taxes requiredPay on average every quarter。每季度截止日期分别是4月15日，6月15日，9月15日，下年度的1月15日。
If there is a holiday, it will be postponed to the next working day.As shown in the screenshot of the tax table at the top of the article, the taxpayer actually owed $2018 ($16,018.00-$16,332) to the tax bureau in 314.
如想避免罚款，该纳税人应分别于2018年4月15日，6月15日，9月15日，和2019年1月15日交纳$4,004.00或以上为最佳。
Tax payment method for advance tax payment
We can go onlineIRS Direct Pay, EFTPS, And methods such as mailing forms 1040ES and cheques, and submitting prepaid taxes every quarter.
If you have an additional W2 salary income, you can also fill in W4 in the sixth line, Additional Amount, requiring the company to deduct an extra $50, $100 and other taxes you need to pay in advance for each salary.
Apply for exemption of advance tax penalty
If you are unable to pay the advance tax due to an accident, disaster or other unusual circumstances, the fine is unfair.You can provide proof to apply for a penalty exemption from the IRS.
If you have retired at the age of 62 or become disabled for any reason during the tax filing year or the previous year, and the insufficient advance tax payment is due to reasonable reasons and not deliberately neglected, you can also provide proof and apply to the tax bureau for exemption of fines.
Although you can apply to the tax bureau for exemption from the fine for advance tax payment due to some force majeure reasons, we still recommend that you plan early to avoid fines.
Article summary
For brokers (real estate, insurance, securities), freelancers, or small and medium-sized self-employers who have just started to take Form 1099, they should understand their tax situation and declare according to the correct procedures and rules. This can avoid unnecessary and easy to be caught. Ignored fines.
American Life Insurance Guide CommunityIt is recommended that when reviewing tax bills and dealing with tax-related issues, seek the help of professional accountants and use professional services to protect the maximum benefits of each taxpayer.
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