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Old 04-04-2008, 02:22 PM   #21
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My goal is to be +/- $200 total to fed & state. Missed the mark this year ($950 back from fed, owed NJ $263)...we'll play this game next year too..
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Old 04-04-2008, 02:34 PM   #22
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Heck no. I owed $4500, federal & state. I was negligent with my quarterlies this year.
I never heard of "quarterlies". Is that something rich people need to do?
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Old 04-04-2008, 03:16 PM   #23
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Unless you count us as rich, no. DW is self employed, so there is no "employer" taking withholdings out. She has to estimate her tax liability and is supposed to pay every quarter. We think we have it down now and next year should be the usual 1k + or -
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Old 04-04-2008, 03:37 PM   #24
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I never heard of "quarterlies". Is that something rich people need to do?
Quarterly estimated tax payments

EDIT: Oops, laurencewill beat me to it.
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Old 04-04-2008, 03:55 PM   #25
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No, we try to break even. Last year we got $74 back from federal, paid $14 to state. I think that's about as close as anyone can get. This year we got $500 back from fed due to an unexpected deduction, $71 back from state. Still pretty close.
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Old 04-04-2008, 03:59 PM   #26
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I underpaid in quarterlies last year and they fined me $20.

The fine varies by how much you owe and if it is too much the IRS are not happy about it especially if it happens more than once or twice .
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Old 04-04-2008, 04:13 PM   #27
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I also had to be conservative because last year I underpaid a bit, and had more income, so if I owed again this year there'd be a penalty.
Not necessarily true. Check out the safe harbor clauses. I believe there is a safe harbor such that if you pay in this year at least as much as your total liability last year, you won't owe a penalty no matter how much you underpay. (It may be 110% of last year's total liability if you make "a lot" of money, I forget.)

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Old 04-04-2008, 04:22 PM   #28
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Bottom line, we started with getting back 13k in Fed and State taxes, and after SEP IRA, we are getting a whopping $15,000 - dumb!
If you had not had this inadvertantly overwithheld, what would you have done with it?
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Old 04-04-2008, 05:11 PM   #29
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If you had not had this inadvertantly overwithheld, what would you have done with it?
It's a good question, while the vast majority would have reduced debt and increased savings/investments, would the frictional loss (oh, go ahead and get cheese on our whoppers, we're doing good.) have been more than the interest gained?
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Old 04-04-2008, 05:18 PM   #30
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Whatever you might have put into equities, perhaps for once Uncle Sam did some dirty market timing for you so you didn't lose any of it?

Although cheese on the whoppers would have that hedonic value discussed on another thread and you can't beat the taste of hedonic value!
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Old 04-04-2008, 05:42 PM   #31
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My goal is to owe Uncle Sam as much as possible. I'm not retired yet so this year I am happy to owe $12,011 including $33 in penalties, but not happy that includes about $4,207 in AMT...

I always owe my state several $100 too.
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Old 04-04-2008, 05:50 PM   #32
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While I owe big-time this year, if the folks getting big refunds invest like me, then they should be thanking Uncle Sam. I would've put the money in the stock market and promptly been down 10%. So lending to the IRS at 0% is better than going down 10%.
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Old 04-04-2008, 05:56 PM   #33
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1. One year I filled out my Sept estimated tax payment, put it in the envelope, put the stamp on, and then put it in the filing cabinet. Had to pay a bit of penalty (which depends on how much you were off by).

2. I usually estimate my taxes in December, then adjust the Jan payment accordingly.

3. You know that if you pay 100% (or 110%) of your prior year tax, then you are safe, right? That's the easiest way to calculate it.
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Old 04-04-2008, 05:57 PM   #34
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Anybody else like getting big returns? Use it despite knowing you're loaning money for free?
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I owe, even with quarterly estimates.........oh well, Uncle Sam GAVE ME a loan for a few months.......
Some extraordinary things happened in 2007,not likely to be an issue in 2008.......
We got hammered pretty hard on 2007 taxes for realizing over a decade's worth of Tweedy, Browne cap gains. I keep telling myself "It's good to pay taxes, it's good to have capital gains"... It makes me feel good about the 2008 estimated taxes, too. Sure. The numbers don't lie, however-- we're saving far more on fund expenses than we paid in taxes.

We got hammered by penalties, too-- $35 to the feds for not realizing that the kid's UTMA cap gains would be taxed at the parent's rate, and another $25 to the state because the penalties are applied before the credits. I also royally screwed up our IRAs by getting too eager and overcontributing (spouse donated almost all of her Reserve 2007 income to the TSP). All this despite our spreadsheet from hell and the annualized method of estimating our income.

So from now on I'm not contributing to IRAs until after the year is over and we know our AGI. Our spreadsheet now reminds us to check estimated taxes for both us and our kid, as well as both the state and the feds, and to watch out for the kiddie tax.

The penalties are tuition payments for my doctoral studies at the School of Experience, and we're still way ahead on what we'd pay a tax accountant.

As for our federal credit or rebate or incentive or whatever we're calling it, we'll be enjoying a nice family dinner at Bravo's restaurant and then investing the rest.
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Old 04-04-2008, 06:21 PM   #35
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I have only done our Federal taxes and we owe a few hundred. We normally owe the state a small amount, so will probably owe them more this year also. We lost our last exemption for a child, when our DD was married last July. However, she still lives with us and her DH is here half of the time. She is attending college full-time and her DH is in the Navy and drives home when he is not working. She is saving us money, since she received a college scholarship that pays for her college tuition and a separate scholarship that paid for most of her college books this year. We also are enjoying the time that they are spending with us and will miss them when they have to leave.
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Old 04-04-2008, 06:50 PM   #36
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Not necessarily true. Check out the safe harbor clauses. I believe there is a safe harbor such that if you pay in this year at least as much as your total liability last year, you won't owe a penalty no matter how much you underpay. (It may be 110% of last year's total liability if you make "a lot" of money, I forget.)

2Cor521
As I said, I had (considerably) more income last year, so it follows that I had a larger liability. Covering last years liability would've been overpaying a lot more.

Actually, I realize now I wasn't clear that last year is when I had more income.
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Old 04-04-2008, 07:26 PM   #37
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Kronk,

I'm assuming you set your federal exemptions at 10. I am not an expert, but I believe it is possible to set your federal exemptions higher than 10 provided you have a reasonable basis for doing so -- and I've always thought that it seemed reasonable to have your allowances set higher if you still manage to have enough withheld to cover your taxes owed.

Many years ago, I had my federal allowances set at 14 and was still getting federal refunds. This was due to having my somewhat large and fairly regular profit sharing bonuses taxed at the top marginal rate. I never had any problems either with my employer at the time or the IRS.

Do note that the IRS can check up on you and if it determines you're trying to avoid paying your taxes (perhaps by massive deliberate underwithholding) they can force you to claim fewer allowances (even down to zero, I think), perhaps forever.

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I think they let me set it at 9 allowances -- whatever it was that you could do without getting an approval from the IRS. We only sold the business in July, so they were set at 0 for the first half of the year. This was also just a one-year thing, so it's no biggy.

Don't you worry, this year I'm gettin' them back. I switched over to 1099 contracting, and I'm running my own payroll. I'll be contributing $30,500 to my solo 401k and am probably going to end up owing a few thousand in taxes when they roll around next year due to how I've set up my salary.
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Old 04-04-2008, 07:27 PM   #38
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I never heard of "quarterlies". Is that something rich people need to do?

Hardly. If you expect to owe more than $1000 you're supposed to pay quarterlies. See the IRS publication
Frequently Asked Questions - 9.3 Individuals
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Old 04-04-2008, 07:43 PM   #39
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Overpayed about 6-7k on my quarterlies, aka estimated tax payments.

Got my passport but didn't get going on any overseas trips/cruises and let 12/31 pass - not taking my initially intended 5% variable out of the portfolio.

Five travel trips - visiting mostly(minimal motel bills) - 3 to New Orleans, two to Alabama.

? apply to 2008 estimated taxes or spend the money and party - don't know yet.

Two travel commitments promised so far - family gathering Nags Head in Sept. and possibly fishing Weiss Lake in north Alabama, date open.

heh heh heh - 2006 taxes were higher cause took a chunk out to do some remodeling plus several trips and a cruise.
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Old 04-04-2008, 08:27 PM   #40
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I overpaid Uncle by $2568.....not a lot, but still too much. Uncle put it back in my bank acct this morning!

When I was cyphering out all the numbers last year right after I retired, I thought my employer hadn't held out enough, so I quickly filled out a new W4-P and increased the amount of withholding on my pension checks by $250/mo for 8 months......$2000. Did my taxes last month, and discovered they had withheld enough, and I was wrong. I filed a new W4-P in December (effective starting 1/2008 ) and removed that additional $250/mo deduction.....which, btw, made for a nice 'pay raise' this year (in addition to a 3% cola increase).

I overpaid the state by $147, but I'll owe them some next April.....but only on investment income, as my pension is exempt in IL.
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