As tax time rapidly approaches, many New Yorkers are still unaware of the details of certain issues that will inevitably affect them and their finances. While many people simply get their tax information from their workplace and follow the instructions when filling out their tax forms, some do not have it so simple. This can lead to mistakes that will cause legal problems that can spiral out of control. For those who are concerned about errors they might have made in paying their taxes, have not paid enough or did not pay at all, it is wise to have legal assistance in understanding federal and state tax collections.
Estimated taxes can be a confusing topic. Knowing who is obligated and not obligated to pay estimated taxes is imperative. Since taxes are required to be paid as a person receives or earns income during the year, some must pay an estimated amount. People might receive salary or income from work or other sources. If this is through self-employment, capital gains, dividends and more, estimated tax is a part of the process. Those who have their own business will generally need to pay estimated taxes.
S corporations, sole proprietors, partners among others must pay an estimated tax if they expect to owe a minimum of $1,000 at tax time. For corporations, they will need to make the estimated tax payment if they owe $500 or more. The estimated tax is not applicable to those who are paid in salary or wages if the employer is asked to withhold more from the pay. The following three conditions must be in place for the person to be free of estimated taxes: there was no tax liability the year before; the person was a citizen of the U.S. or a resident for the entire year; and the previous tax year covered the full 12 months.
People frequently find themselves facing an audit and penalties for not paying the estimated tax. Anyone who is concerned about this and how it can impact them should have legal advice. A law firm that provides representation in federal and state tax collections and all its areas should be called for guidance in a case related to estimated tax or any other tax issue.