January 16 Deadline for Final 2023 Quarterly Tax Payments

The IRS is advising taxpayers who may not have paid sufficient tax during 2023 to consider making a fourth-quarter tax payment by January 16. This could help avoid penalties or unexpected tax bills when filing in 2024.

Taxes are typically paid throughout the year via paycheck withholdings or by making quarterly estimated tax payments, or a combination of both. This method ensures that most of the tax is paid as income is earned or received.

Who Should Make a Payment?

Those earning income not subject to withholding, such as self-employed individuals or independent contractors, are advised to make quarterly tax payments. Additionally, those who owed tax in the previous year may likely owe again. This group includes:

• Individuals who previously itemized deductions but now use the standard deduction,
• Households with multiple wage earners,
• Employees with non-wage income (e.g., dividends),
• Individuals with complex tax situations, and
• Those who did not increase their tax withholding adequately.

What Income is Taxable?

The IRS reminds that most types of income are taxable. This includes unemployment benefits, refund interest, gig economy earnings, digital assets, and more. When calculating quarterly tax payments, all forms of income, including part-time work and sales of goods, should be included.

Also, certain financial transactions, especially towards the end of the year, can affect taxes unexpectedly. This includes holiday bonuses, lottery winnings, stock dividends, and profits from selling assets like stocks, bonds, virtual currency, or real estate.

How to Make an Estimated Tax Payment

The quickest and easiest way to pay estimated taxes is electronically, with several options available:

• IRS Direct Pay allows scheduling payments before the January 16 deadline.
• IRS Online Account provides payment history and tax information.
• Electronic Federal Tax Payment System (EFTPS) offers features like scheduling payments up to a year in advance.
• Payments can also be made with a debit or credit card, though a fee by the card processor applies.

Using these electronic options ensures prompt crediting of payments. Additional payment information is available on the IRS website at IRS.gov/payments.

Monitoring Tax Withholding

The Tax Withholding Estimator on IRS.gov can help taxpayers determine if they need to make estimated tax payments and the appropriate amount. Alternatively, the worksheet in Form 1040-ES or Publication 505 on the IRS website can be used for guidance.