Money Guy Show
Are You In Trouble (With the IRS)?
Mar 26, 2025
Tax season brings stress, and this discussion breaks down how to tackle IRS issues without losing your mind. They provide tips on managing penalties for self-employment taxes and the vital distinctions between employee and contractor obligations. The conversation turns to raising financially savvy kids, emphasizing work ethic and smart money habits. With insights on Roth IRA contributions and new doctors navigating salary jumps, they highlight staying grounded in financial goals. Plus, an entertaining take on managing finances in relationships, especially around whole life insurance!
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Quick takeaways
- Understanding the importance of making quarterly tax payments can prevent penalties, especially for those with fluctuating income from side businesses.
- Proactively seeking advice from tax professionals and utilizing tools like Form 2210 can help alleviate underpayment penalties effectively.
Deep dives
Understanding Quarterly Tax Payments
Many individuals, particularly those with side businesses, may not realize the importance of making quarterly tax payments to the IRS. Failure to do so can result in penalties, especially when income levels change due to gig work or bonuses. It's crucial to understand that employees have taxes withheld from their wages, while independent contractors bear the responsibility for tax payments directly. To avoid penalties, individuals should either pay 90% of current-year taxes as income is earned or 100% of the previous year's taxes, with an adjustment for high earners.
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