Don’t overlook this extra Tax Day task if you’re self-employed

Personal Finance

“If you owe more than $1,000 at the end of the year and you don’t qualify for one of the [exceptions], you will be penalized,” said certified financial planner and certified public accountant DeDe Jones, managing director of Innovative Financial in Lakewood, Colorado.

The IRS can assess underpayment penalties above that threshold unless:

1) You earn below $150,000 and paid 90 percent of your current-year tax burden or 100 percent of the previous year’s tax bill; or

2) You earn more than $150,000 and paid at least 90 percent of your current-year tax burden or 110 percent of what you paid the previous year.

While the above generally holds true for all workers, those with taxes withheld by an employer typically are less likely to underpay by enough to generate a penalty.

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