Failing to make the final 2024 quarterly estimated tax payment could result in 'unforeseen penalties', according to the IRS.

• The estimated tax deadline for the fourth quarter of 2024 is January 15th, and failing to make a payment could result in "unexpected penalties and fees," as stated by the IRS.
• Self-employment, small businesses, investments, gig economy work, and other sources typically require estimated tax payments.
• To avoid late payment penalties, tax filers can send 90% of their 2024 taxes or 100% of their 2023 levies if their adjusted gross income is below $150,000.

The IRS states that failing to pay the fourth-quarter estimated tax by Jan. 15, 2024, could result in "unexpected penalties and fees" when filing your return.

If you don't withhold enough from your full-time or retirement income, you could still owe taxes, even if estimated taxes apply to income without withholdings like freelance work, small business earnings, or investments.

The IRS stated that individuals may owe fourth-quarter taxes for various reasons, including year-end bonuses, stock dividends, capital gains from mutual fund payouts, and profits from crypto sales.

In 2025, nearly half of credit card users will be carrying debt. As natural disasters become more frequent, affected student loan borrowers will have more options. Your paycheck could be slightly larger in 2025 due to changes in tax brackets.

According to Brian Long, senior tax advisor at Wealth Enhancement in Minneapolis, federal income taxes are "pay as you go," meaning the IRS anticipates payments to be made throughout the year as income is earned.

If you miss the Jan. 15 deadline, you may face a daily compounding penalty based on the current interest rate and the amount you should have paid.

To prevent a shocking tax bill at the end of the year, the IRS suggests paying taxes either through withholdings or estimated payments.

What to know about the 'safe harbor' rules

To avoid penalties, you can follow the "safe harbor" rule, which means you're meeting the IRS pay-as-you-go requirement, as advised by Long.

You must pay at least 90% of your 2024 tax liability or 100% of your 2023 taxes, whichever is smaller.

If your 2023 adjusted gross income was $150,000 or higher, the threshold for certain benefits increases to 110%. You can find this information on line 11 of Form 1040 from your 2023 tax return.

If you make more than expected in 2024, you may still owe taxes even if you don't adjust your tax payments.

According to Sheneya Wilson, a CPA and founder of Fola Financial in New York, the last quarterly payment is beneficial because most individuals should have their year-end numbers finalized.

How to make quarterly estimated tax payments

The "most effective" way to manage estimated payments through your IRS online account, which provides a comprehensive overview of your payment history, pending payments, and other relevant information, as per the agency.

You can pay your taxes using various methods such as IRS Direct Pay, EFTPS, debit card, credit card, or digital wallet.