Decision
Michael decided to switch from paying taxes as a lump sum after filing to making quarterly estimated payments starting with the 2026 tax year. He asked Andrew Hawkins (CPA on Fire) to set this up.
Context
2025 return resulted in $67,368 due ($56,018 federal + $11,350 SC) plus penalties and interest (approximately 5.5% federal) because taxes were not paid via withholding or quarterly estimates during the year. Prior December projection was $89,833; the reduction came from lower Rye Valley net income. Penalties were partially abated; remaining interest is not abatable. To avoid repeating this, Michael asked to move to quarterly estimated payments going forward.
Options considered
- Continue lump sum payment at filing with potential penalties and interest.
- Switch to quarterly estimated payments to eliminate or minimize penalties and interest.
Consequences
CPA on Fire (Andrew Hawkins) to provide a quarterly estimated payment schedule for 2026. Michael will make quarterly payments in April, June, September, and January going forward. Eliminates the annual penalty/interest exposure from delayed payment.