Under what circumstance will the IRS charge you a late-payment penalty for taxes?
"The IRS provides a little more information on the subject on this FAQ: Will I be charged interest and penalties for filing and paying my taxes late?: If you did not pay your tax on time, you will generally have to pay a late-payment penalty, which is also called a failure to pay penalty. Some guidance on what constitutes ""reasonable cause"" is found on the IRS page Penalty Relief Due to Reasonable Cause: The IRS will consider any sound reason for failing to file a tax return, make a deposit, or pay tax when due. Sound reasons, if established, include: Note: A lack of funds, in and of itself, is not reasonable cause for failure to file or pay on time. However, the reasons for the lack of funds may meet reasonable cause criteria for the failure-to-pay penalty. In this article from U.S. News and World Report, it is suggested that the IRS will generally waive the penalty one time, if you have a clean tax history and ask for the penalty to be waived.  It is definitely worth asking them to waive the penalty." I just got hit with the late payment penalty due to a bug in the H&R Block tax program.  The underpayment was only $2 and the penalty was a whopping 1 cent.   The letter that informed me of the error also said that they did not consider the $2.01 worth collecting, the amount owed had been zeroed. In practice the IRS seems to apply the late payment penalty when they issue a written paper notice.  Those notices typically have a pay-by date where no additional penalty applies.  The IRS will often waive penalties, but not interest or tax due, if the taxpayer presses the issue. Assuming US/IRS: If you filed on time and paid what you believed was the correct amount, they might be kind and let it go. But don't assume they will. If you can't file on time, you are supposed to file estimated taxes before the deadline, and to make that payment large enough to cover what you are likely to owe them. If there is excess, you get it back when you file the actual forms. If there is a shortfall, you may be charged fees, essentially interest on the money you still owe them calculated from the submission due date. If you fail to file anything before the due date, then the fees/interest surcharge is calculated on the entire amount still due; effectively the same as if you had filled an estimated return erroneously claiming you owed nothing. Note that since the penalty scales with the amount still due, large errors do cost you more than small ones. And before anyone asks: no, the IRS doesn't pay interest if you submit the forms early and they owe you money. I've sometimes wondered whether they're missing a bet there, and if it would be worth rewarding people to file earlier in order to spread out the work a bit better, but until someone sells them on that idea... Years ago I mailed my personal tax return one day after the due date, and my check was deposited as normal, and I never heard anything about it. As an employer, I once sent in my employee's withheld federal taxes one day after the due date, and I later received a letter stating my penalty for being late worked out to be around $600. The letter stated that since this was my first time being late they would waive the fee. In both cases, they could have charged me a late fee if they wanted to.
"It is the presupposition that makes this a rather ridiculous question. Makes me curious, would this be a civil or criminal crime? If you are convinced that this presupposition of illegality is a thing, talk to a lawyer. Yes, there may be consequences of doing any variety of actions while you owe the IRS, and while you do not owe the IRS. As an unincorporated business the IRS does not stop you from gaining an additional source of income to pay them with.  Perhaps lenders might not help you with capital. As an incorporated business no state is going to ask you if you ""owe back taxes"" before they allow you to pay them to register your business in their state. This isn't legal advice, I'm just assuming there is no legal advice to give based on your presupposition, to your original question, I'm going to go with no." Simply file an amended return to correct the mistake. This happens all the time and is a standard procedure that every legitimate tax pro can handle. You can work it out with the tax pro about whose mistake it was and who should pay for the additional service. No, there is no special leniency given to first time tax payers. In general, this shouldn't be an issue. The IRS collects your taxes out of every one of your paychecks throughout the entire year in what is called a Withholding Tax. The amount that the IRS withholds is calculated on your W-4 Form that you file with your employer whenever you take a new job. The form helps you calculate the right number of allowances to claim (usually this is the number of personal exemptions, but depending upon if you work a second job, are married and your spouse works, or if you itemize, the number of allowances can be increased. WITHHOLDING TAX Withholding tax (also known as “payroll withholding”) is essentially income tax that is withheld from your wages and sent directly to the IRS by your employer. In other words, it’s like a credit against the income taxes that you must pay for the year. By subtracting this money from each paycheck that you receive, the IRS is basically withholding your anticipated tax payment as you earn it. In general, most people overestimate their tax liability. This is bad for them, because they have essentially given the IRS an interest free loan (and weren't able to use the money to earn interest themselves.) I haven't heard of any program targeted at first time tax payers to tell them to file a return, but considering that most tax payers overpay they should or they are giving the government a free grant. "Your question does not say this explicitly, but I assume that you were once a W-2 employee.  Each paycheck a certain amount was withheld from your check to pay income, social security, and medicare taxes.  Just because you did not receive that amount of money earned does not mean it was immediately sent to the IRS.  While I am not all that savvy on payroll procedures, I recall an article that indicated some companies only send in withheld taxes every quarter, much like you are doing now.  They get a short term interest free loan.  For example taxes withheld by a w-2 employee in the later months of the year may not be provided to the IRS until 15 January of the next year.   You are correct in assuming that if you make 100K as a W-2 you will probably pay less in taxes than someone who is 100K self employed with 5K in expenses.  However there are many factors.  Provided you properly fill out a 1040ES, and pay the correct amount of quarterly payments, you will almost never owe taxes.  In fact my experience has been the forms will probably allow you to receive a refund.  Tax laws can change and one thing the form did not include last year was the .9% Medicare surcharge for high income earners catching some by surprise.    As far as what you pay into is indicative of the games the politicians play.  It all just goes into a big old bucket of money, and more is spent by congress than what is in the bucket.  The notion of a ""social security lockbox"" is pure politics/fantasy as well as the notion of medicare and social security taxes.  The latter were created to make the actual income tax rate more palatable.     I'd recommend getting your taxes done as early as possible come 1 January 2017.  While you may not have all the needed info, you could firm up an estimate by 15 Jan and modify the amount for your last estimated payment.  Complete the taxes when all stuff comes in and even if you owe an amount you have time to save for anything additional.  Keep in mind, between 1 Jan 17 and 15 Apr 17 you will earn and presumably save money to use towards taxes.  You can always ""rob"" from that money to pay any owed tax for 2016 and make it up later. All that is to say you will be golden because you are showing concern and planning.  When you hear horror stories of IRS dealings it is most often that people spent the money that should have been sent to the IRS." I'm also self employed. Your circumstances may be different, but my accountant told me there was no reason to pay more than 100% of last years' taxes. (Even if this years' earnings are higher.) So I divide last year by 4 and make the quarterlies. As an aside, I accidentally underpaid last year (mis-estimated), and the penalty was much smaller than I expected. "The short answer is that the IRS knows this is an issue, so they are prepared to deal with the ""discrepancies.""  The filer does not need to something special to call it to their attention.  Keep good records and consistently report according to your accounting processes.   Exactly how the IRS resolves / flags this, I don't know.  Maybe someone else can answer, but you can imagine that if they track you for multiple years they should have some idea of how many dollars are rolling over and whether you might have ""forgotten"" to report something from a few years ago that happened at a year-end break." "The money gets sent to the IRS through the EFTPS system. Depending on the amounts, the employers are required to deposit it on a monthly/semi-weekly basis, so they don't get to keep the tax money for long. Failure to deposit the payroll taxes on time is one of the most heavily penalized IRS offenses. This area of violations is called ""trust fund violations"". It is one of the very few areas in which employees may be liable for corporate misdoings (i.e.: an HR or accounting manager responsible for payroll may be personally liable for trust fund violations)." The only way you will incur underpayment penalties is if you withhold less than 90% of the current year's tax liability or 100% of last years tax liability (whichever is smaller).  So as long as your total tax liability last year (not what you paid at filing, but what you paid for the whole year) was more than $1,234, you should not have any penalty. What you pay (or get back) when you file will be your total tax liability less what was withheld. For example, you had $1,234 withheld from your pay for taxes.  If after deduction and other factors, your tax liability is $1,345, you will owe $111 when you file.  On the other hand, if your tax liability is only $1,000, you'll get a refund of $234 when you file, since you've had more withheld that what you owe. Since your income was only for part of the year, and tax tables assume that you make that much for the whole year, I would suspect that you over-withheld during your internship, which would offset the lack of withholding on the other $6,000 in income. The IRS allows filers to attach a statement explaining the reason for late filing.  I have had clients do this in the past, and there has never been an issue (not that that guarantees anything, but is still good to know). Generally, the IRS is much more lenient when a taxpayer voluntarily complies with a filing requirement, even if it's late, than if they figure it out themselves and send a notice. The difference is that if you end up owing more than $1k in taxes come April, you **will** be mandated for withholding next year (that's at the federal level, I don't know CA law in particular); and if this isn't the first time you've done it, you may owe additional penalties as well.  Your actual tax liability comes out the same either way; you're *probably* better off just letting Uncle Sam have an interest-free loan for a few months and getting the difference back in April, than risking it; but if you've done the math and know you'll only owe exactly $999.99, you can do what you want.  :) You are only responsible for IRS debt that you owe from returns that you have filed for yourself. The back taxes that your dependent owes are between him and the IRS. As others have said, make sure you can and do file your taxes on a cash basis (not accrual). It sounds like it's very unlikely the company is going to issue you a 1099 for invoices they never paid you. So you just file last year's taxes based on your income, which is the money you actually received. If they do pay you later, in the new year, you'll include that income on next year's tax return, and you would expect a 1099 at that time. Side note: not getting paid is unfortunately common for consultants and contractors. Take the first unpaid invoice and sue them in small claims court. After you win (and collect!), tell them you'll sue them for each unpaid invoice in turn until they pay you in full. (You might need to break up the lawsuits like that to remain under the small claims limit.) I will answer this question broadly for various jurisdictions, and also specifically for the US, given the OP's tax home: Generally, for any tax jurisdiction If your tax system relies on periodic prepayments through the year, and a final top-up/refund at the end of the year (ie: basically every country), you have 3 theoretical goals with how much you pre-pay: Specifically, for the U.S. All information gathered from here: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes. In short, depending on your circumstance, you may need to pay quarterly estimated tax payments to avoid penalties on April 15th. Even if you won't be penalized, you, may benefit from doing so anyway (to force yourself to save the money necessary by April 15th).  I have translated the general goals above, into US-specific advice: In the US we have social security taxes, where for a full time employee the company pays half and the employee pays half.  When you work as a business, what we call 1099 for the form that the wages are reported on, then the contractor pays the full amount of social security tax. There are times when a contractor can negotiate a higher rate because the company does not have to pay that tax.  However, most of the time the company just prefers to negotiate the rate based on your value.  If you are a 60K year guy, then that is what they will pay you.  From the company's perspective it does not matter what your tax rate is, only the value you can bring to the company.  If you can add about 180K to the bottom line, then they will be happy to pay you 60K, and you should be happy to get it. Here in the US a contractor can expect to make about 7.5% more of an equivalent employee because of the social security tax savings to the company.  However, not all companies are willing to provide that in compensation.  Some companies see the legal and administrative costs of employees as normal, and the same costs with contractors as extra so they don't perceive a cost savings.  There are other things that would preclude employers from giving the bump although it is logical to do so. First you will really have to feel out your employer for the attitude on the subject.  Then I would make a logical case if they are open to providing extra compensation in return for tax savings.  If I am an employee at 60K, you would also have to pay the government 18K.  How about you pay me 75K as a contractor instead? That would be a great deal for all in the US. The reason to do a stock split is to get the price of the stock down to an affordable range. If your stock costs $100,000 per share, you are seriously cutting in to the number of people who can afford to buy it. I can think of two reasons NOT to do a stock split. The biggest is, Why bother? If your stock is trading at a reasonable price, why change anything? It takes time and effort, which equals money, to do a stock split. If this serves no purpose, you're just wasting that effort. The other reason is that you don't want to drive your stock price down too low. Low prices are normally associated with highly speculative start-up companies, and so can give a wrong impression of your company. Also, low prices make it difficult for the price to reflect small changes. If your stock is trading at $10.00, a 1/2 of 1% change is 5 cents. But if it's trading at $1.50, a 1/2 of 1% change is a fraction of a penny. Does it go up by that penny or not? You've turned a smooth scale into a series of hurdles.