Making First Quarter 2024 Estimated Tax Payments

Employees and Retirees Are Reminded of the April 15,2024 Deadline for Filing 2023 Tax Returns and Making First Quarter 2024 Estimated Tax Payments

Federal employees and retirees have a few days left before the April 15,2024 deadline for filing 2023 federal and in most states, state income tax returns. April 15,2024 is also the deadline for employees and retirees to make their first of four federal estimated tax payments for 2024. This column discusses how employees and retirees who need additional time to file their 2023 federal income tax returns can request a filing extension. Also discussed are those employees and retirees who are candidates and should make estimated tax payments during 2024 and when the first estimated tax payment must be made.

Extension of Time to File One’s 2023 Federal Income Tax Return

If an employee/retiree needs more time to prepare his or her 2023 federal income tax return, the employee and retiree should be aware that:

An extension of time to file one’s tax return is not an extension for the employee or retiree to pay anticipated balance due on the 2023 Federal income tax return.
An extension to file 2023 income taxes allows an employee or a retiree to file their 2023 return no later than October 15, 2024.
A filing extension request must be made by 11:59 pm April 15, 2024.

Some tax filers can use IRS Free File to electronically request an automatic tax-filing extension. In order to get the six-month filing extension until October 15, 2024, the individual tax filer must estimate his or her 2023 federal income tax liability and in particular what is owed in 2023 federal income tax. If there is anything owed, then the individual must pay the amount owed at the time the extension is requested.

An individual receives an automatic six-month extension for filing IRS Form 1040 by filing IRS Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) electronically or on paper. A reasonable estimate of 2023 federal income tax liability must be entered on Form 4868. The IRS can invalidate an extension if the tax estimate is not reasonable. A filing extension application is valid even if the estimated balance due is not paid with Form 4868.

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An extension of time to file one’s 2023 federal income tax return eliminates the late filing penalty if the return is filed by October 15, 2024. If an individual paid at least 90 percent of the 2023 federal income tax liability through withholding, estimated tax payments or with IRS Form 4868, the late payment penalty does not apply during the automatic extension period provided the remaining balance is paid with the tax return when it is filed. Interest is charged on any unpaid balance from the original due date of April 15, 2024.

Underpayment/Estimated Tax Penalty

Many federal employees and retirees were shocked that they were subject to an underpayment penalty when they filed their 2023 federal income tax returns. For 2023, IRS rules are that an individual is subject to an underpayment penalty on his or her 2023 income tax return unless their total federal income tax withholding (from salaries, pension plans, qualified retirement plans and IRAs) and federal estimated tax payments equal the smaller of: (1) 90 percent of the individual’s tax liability shown on the 2023 federal income tax return; or (2) 100 percent of the individual’s tax liability shown on the individual’s 2022 federal income tax return (110 percent if the individual’s 2022 adjusted gross income (AGI) exceeded $150,000).

An individual is not subject to an underpayment penalty does not apply if: (1) The federal income tax balance due after subtracting federal income tax withholding is less than $1,000; or (2) The individual was a US citizen or resident alien and had no tax liability on a 2022 federal income tax return that covered 12 months.

To avoid any under payment tax penalty for 2024, those employees and retirees who think that their withholdings from their salaries and retirement withdrawals during 2024 will be insufficient should make estimated tax payments during 2024.

Estimated tax payments must be made in four equal installments in order to avoid a penalty. If any installment is paid late, a penalty is charged based on the payment due date and ending on the date paid. The following table shows the federal estimated tax payment due dates for 2024.

Estimated Tax Payments -2024

Installment	Due Date
1	April 15, 2024
2	June 17, 2024
3	September 16, 2024
4	January 15, 2025

For more information about federal estimated tax payments and federal income tax withholding, employees and retirees should go to IRS Publication 505 (Tax Withholding and Estimated Tax) (can be downloaded HERE.

Employees and retirees who have problems and questions about 2023 federal filing extensions and 2024 federal estimated tax payments are advised to contact a tax professional.

Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.