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Friday, April 15, 2011

Illinois Taxpayers Beware of New Tax Penalties !!!!!!!!!

By JC Leahy

When you pay your income taxes, it's not enough that you tally up on April 15 and fork over the cash.  The IRS, and states, require that you pay your taxes in ADVANCE as the year progresses. Otherwise, you get slapped with an ugly penalty.

People who earn wages/salaries take care of this by having taxes withheld from their paychecks.  People with other income make estimated tax payments quarterly.  One of the IRS's benchmarks is that you have to pay 100% of the prior year's tax in order to avoid a penalty for the current year.  Most states use the same benchmark.

This year, the State of Illinois decrees that for 2011 and beyond, you will have to pay not 100%, but 150% of the prior year's taxes to avoid that nasty "late payment" penalty.  Unsuspecting Illinois taxpayers are at risk of an ugly penalty surprise on April 15, 2012 unless they plan accordingly.  Thanks a lot, Illinois legislature!!!

(PS -  Of course, there is an alternate standard for avoiding late payment penalties.  If you have a crystal ball, you can just pay 90% of the current year's tax liability, and then pay the balance by April 15.)

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