What Are Your Options if You Failed to Pay Estimated Taxes to the IRS in 2024?
Posted in Offshore Account Update on January 31, 2025 | Share
In the United States, federal income taxes are “pay-as-you-go.” As the Internal Revenue Service (IRS) explains, this means that taxpayers “must pay most of their tax throughout the year in which their income is earned or received.” For those who don’t have federal taxes withheld from their paychecks, this means making quarterly estimated tax payments. So, what if you failed to pay estimated taxes to the IRS in 2024? Washington D.C. IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains.
Avoiding (or Reducing) Penalties for Failure to Pay Estimated Taxes in 2024
The IRS provides individual taxpayers with various options for avoiding or reducing the penalties for failing to make estimated tax payments throughout the year (corporate taxpayers’ options are much more limited). The options that are available to individual taxpayers include:
- Seeking relief based on a family member’s death, local disaster or another “unusual circumstance”
- Seeking relief for “reasonable cause” if you are a recent retiree
- Seeking relief for “reasonable cause” if you recently became disabled
- Seeking relief because “[y]ou had most of your income tax withheld early in the year”
- Seeking relief because your income varied significantly throughout the year
While a family member’s death, local disaster or another “unusual circumstance” can provide grounds to seek the removal of the late-payment penalty for estimated taxes, the other grounds for relief will generally only warrant a penalty reduction. Being unable to pay estimated taxes when due generally does not provide grounds for relief, as the IRS expects taxpayers to set aside the funds needed to pay their taxes on time.
Individual taxpayers who failed to pay estimated taxes based on written advice from the IRS can seek penalty relief as well. As the IRS explains, “[i]f you don't qualify for penalty removal or reduction we may consider making an adjustment if we imposed the penalty after you relied on incorrect written advice we gave you.”
What if You Don’t Have Grounds to Seek Penalty Relief?
If you don’t have grounds to seek penalty relief, you may have other options available. For example, if you cannot afford to pay the full amount you owe, you may qualify to submit an offer in compromise (OIC). Before submitting an OIC, however, you will want to ensure that this is your best option, as voluntarily disclosing a delinquency to the IRS can be risky in some cases. An experienced Washington D.C. IRS tax lawyer will be able to help you make an informed decision and then communicate with the IRS on your behalf as warranted.
Request a Call with Washington D.C. IRS Tax Lawyer Kevin E. Thorn
If you need to know more about the options that are available to taxpayers who failed to submit estimated tax payments for the 2024 tax year, we invite you to get in touch. To request a call with Washington D.C. IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033 or contact us online today.
