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	Pay Now Financial Tip of the Week by Deloitte & Touche OnLine January 11, 1999

Have you paid enough taxes for 1998? If not, make it right this week.

This is your last chance to avoid a penalty for underpaying your 1998 taxes. You need to turn in your fourth-quarter estimated tax voucher for the preceding tax year by January 15.

Federal tax law requires the payment of income taxes throughout the year as you earn your income. This obligation may be met through withholding or quarterly estimated tax payments or both. For 1998, if total tax minus withholding and payments is less than $1,000, you will not be assessed a penalty for underpayment of estimated tax. However, if you overpay your estimated taxes, you are in effect making an interest-free loan to the government, which you would probably prefer to avoid. The penalty for underpayment is calculated as interest on the underpaid balance until it is paid, or until April 15, 1999, whichever is earlier. The interest rate on underpayments in 1998 is 8 percent (as of September 30, 1998), and the rates for 1999 will be announced quarterly by the IRS. The rates are adjusted under a prescribed formula in response to changes in federal short-term interest rates.

Read more about avoiding tax penalties in our Tax Planning Guide.