Are Your Tax Payments on Track


You can avoid an unanticipated tax bill in April and a potential underpayment penalty by making sure you're on track with your 2016 tax payments.

PhoneHow Much?

The total amow1t of estimated tax you're required to pay depends on your adjusted gross income (AGI) for the previous year. If your 2015 AGI was $150,000 or less ($75,000 or less for a married taxpayer filing separately), you should aim to pay the lower of:

  • 90% of your 2016 tax liability, or
  • 100% of your 2015 tax liability. If your 2015 AG I was more than $150,000 ($75,000 for a married taxpayer filing separately), you will need to pay the lower of:
  • 90% of your 2016 tax liability, or
  • 110% of your 2015 tax liability.

You won't owe an underpayrnent penalty if the tax shown on your 2016 return - reduced by withholding taxes paid during the year - is less than $1,000.


Estimated tax payments generally must be made in four equal quarterly installments. For calendar-year taxpayers, quarterly payments are generally due on the 15th of April, June, September, and January of the fo llowing year. If you receive income unevenly (because you have a seasonal business, for example), you may be able to vary the amounts of your payments and still avoid a penalty by using the "annualized income" method.

Resolving Underpayments

If you discover that you've been underestimating your taxes, it may be possible to resolve the problem by requesting an increase in withholding from your or your spouse's paychecks for the remainder of the year. Alternatively, if you are taking taxable distributions (such as required minimum distributions) from an individual retirement account (IRA), 401(k), or other retirement plan, you could increase the withholding from year-end distributions. With either alternative, the IRS will apply the withheld tax pro rata over the tax year to reduce prior underpayments of estimated tax.

Example. A taxpayer makes estimated payments of $2,000 each for the first three installments and plans to pay an additional $2,000 in January. However, in November, she discovers that she actually needed to make esLimaLed paymenLs of $3,000 each. She may correct the problem by paying $3,000 in January and asking her employer to withhold an additional $3,000 from her December paychecks.

Time for a Checkup?

We can project your income tax liability for the year and help you identify potential yearend planning moves that may lower your tax bill Please contact us for assistance .

2017 HSA Limits

Eligible individuals covered by a high-deductible health plan (HDHP) and no other health plan* may use a health savings account (HSA) to set aside fW1ds for future medical needs. Contributions to an HSA are tax deductible (within limits), and distributions are tax exempt when used for qualifying out-of-pocket medical expenses.

The IRS has announced the HSA-related limits that will apply for 2017.

HDHP. A qualifying HDHP must have an annual deductible of at least $1,300 for selfonly coverage or $2,600 for family coverage in 2017. Additionally, annual out-of-pocket expenses may not exceed $6,550 for self-only coverage or $13,100 for family coverage.

Contributions. HSA contribution limits will be $3,400 for a person with self-only coverage and $6,750 for a person with family coverage. Eligible individuals 55 or older (and not enrolled in Medicare) may make an additional deductible contribution of $1 ,000. * Dental, vision , long-term care, anci certain other types of coverage are permitted.

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