Have a Tax Question? Ask a Tax Expert
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If I wait until the end of the year to pay any taxes because my owners draw are untaxed income then won't I owe a penalty because I have not been paying into the IRS all year long? My end of year tax bill may be over the allowable amount because they didn't collect on it quarterly?
This year my net profit is only $5k without subtracting some of my work from home expenses like a portion of the electric bill, mortgage, and mileage. However, next year when I am in business all year I expect that I will have a large net profit with not much to lower my expenses since I work from home and my large expenses have been incurred with the set up. Shouldn't I be making estimated tax payments based upon my expected profit rather than my salary since I am not taxed on my owner's draw. Is that what you are saying? Sorry that I am confused and thank you for your prompt response.