Taxes are an inevitable part of financial life, and it is crucial to understand how they work to avoid fines and unpleasant surprises. Whether you receive income through your salary, pension, interest, dividends, or even if you have your own business, it is essential to know the associated tax responsibilities.

Withholding tax from your salary or pension may not be enough to cover your tax obligations, especially if you receive additional income. In cases such as interest, dividends, self-employment income, capital gains, prizes and awards, you may need to make estimated tax payments to avoid penalties.

If you are a self-employed business, estimated tax payments are a crucial part of tax management. They are not only used for income taxes, but also for other taxes, such as self-employment taxes and the alternative minimum tax.

It is important to remember that failure to comply with tax obligations can result in fines. These penalties may apply not only if you don't pay enough through withholding, but also if estimated tax payments are made late, even if you are entitled to a refund when you file your tax return.

Learn more about estimated tax payments by watching the video below: