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Estimated tax payments for all
Old 10-01-2015, 08:18 AM   #1
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Estimated tax payments for all

I estimate my taxes for the year ahead via a complicated spreadsheet. One nice output is that I can tell if I need to pay estimated taxes.
At the start of the year I expect to have to pay estimated taxes but unexpected payments that have withholding can force me into a place where I don't have to pay them because of the safe harbor rules.
So at that point I skip paying and expect an elevated tax bill for that year. I just realized this is a sub optimal strategy and instead I should make a payment of $0.50. In fact I am thinking everybody should pay 50 cents each quarter if you can be bothered to save up to $2 in taxes.
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Old 10-01-2015, 09:36 AM   #2
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So at that point I skip paying and expect an elevated tax bill for that year. I just realized this is a sub optimal strategy and instead I should make a payment of $0.50. In fact I am thinking everybody should pay 50 cents each quarter if you can be bothered to save up to $2 in taxes.
Why? What is the advantage of 4 payments under $1.
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Old 10-01-2015, 09:44 AM   #3
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Why? What is the advantage of 4 payments under $1.
In most tax forms you have to round up numbers to a dollar.
So you would never make a $100 payment but $99.50 instead.
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Old 10-01-2015, 09:49 AM   #4
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Not worth the time or trouble.... I got better things to do with my time...


Heck, even laying on the couch watching TV is better... (heck, I like that and my DW yells at me all the time)....
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Old 10-01-2015, 09:57 AM   #5
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I think there is a rule that says you can round line items but within the line, you are supposed to keep the cents until you total them, then round later. If that is the case,
the savings at most are 0.50.

http://www.irs.gov/instructions/i104...1.html#d0e3572
"If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total."

Line 65 of 1040 asks for the total of all est. payments as 1 line item
65 ) 2014 estimated tax payments and amount applied from 2013 return
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Old 10-01-2015, 10:00 AM   #6
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So here's a dumb (unresearched) question from a relative noob in this estimated tax thing...

If they will be paying me due to PPACA, I've ass-umed that I didn't need to make estimated tax payments. True?

Or should I be paying $0.50?
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Old 10-01-2015, 10:34 AM   #7
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Originally Posted by sengsational View Post
So here's a dumb (unresearched) question from a relative noob in this estimated tax thing...

If they will be paying me due to PPACA, I've ass-umed that I didn't need to make estimated tax payments. True?

Or should I be paying $0.50?
If you are talking about the premium tax credit, that may be true depending on how large it is compared to the tax. See line 13b of the wksht here where you get credits
http://www.irs.gov/pub/irs-pdf/f1040es.pdf
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Old 10-01-2015, 11:26 AM   #8
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Took me awhile to understand what you were getting at. Like they say on car talk, there was some obfuscation as I was trying to figure out what these unexpected "payments" with withholding were before realizing these payments are probably some kind of income and it really didn't matter anyway.

So what you are saying is that you should make quarterly estimated payments ending in $.50 so when you do your taxes you can round them all up to the next dollar so that you get a free 50 cents * 4 payments? So if you actually know you are going to owe $1000 in taxes over the year, instead of 4*250 you pay 4*249.50 knowing that you can round 249.50 to 250 and get credit for $1000 in payments when you really only paid $998?

I sure wouldn't bother making a 50 cent payment vs none. Seems like something an IRS agent might look at and shake his head and decide to dive in and see what other shortcuts you might be trying to pull that aren't legal.

As far as adding or subtracting 50 cents from a regular payment to get the rounding gain, I suppose it's fine but I probably won't bother. I thought maybe they would only allow even dollar amounts but I see their example shows 1234.56, so clearly they do.
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Old 10-01-2015, 05:31 PM   #9
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Took me until your post (RB) to "get it", lol! I wondered what the IRS would say to a check for $0.50.
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Old 10-01-2015, 10:36 PM   #10
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Took me until your post (RB) to "get it", lol! I wondered what the IRS would say to a check for $0.50.

I still do not get it because that is not what the OP said....
"I should make a payment of $0.50."
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Old 10-01-2015, 10:45 PM   #11
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I still do not get it because that is not what the OP said....
"I should make a payment of $0.50."
I have checked that Lacerte takes 4 payments of $0.50 and fills in the 1040 with $4 in taxes paid. Drake does the same. I posted a 50c transfer with EFTPS for Jan 15th.
I have noticed in the past that turbotax will fill in some forms with decimals (sched b for example) rather than round.
So I am saying that making a 50c payment is better than not making one at all. If you have to make an estimated tax payment then round up to a dollar and subtract 50c.
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Old 10-02-2015, 10:48 AM   #12
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I have checked that Lacerte takes 4 payments of $0.50 and fills in the 1040 with $4 in taxes paid. Drake does the same. I posted a 50c transfer with EFTPS for Jan 15th.
I have noticed in the past that turbotax will fill in some forms with decimals (sched b for example) rather than round.
So I am saying that making a 50c payment is better than not making one at all. If you have to make an estimated tax payment then round up to a dollar and subtract 50c.
Again... why?

If you are putting the info in correctly, then you should put that you paid $2 of estimated taxes for the year.... not $4....

Now, if you owe a penalty you can put down that you paid $1 per quarter and the two numbers not match due to rounding....

Putting down $4 is cheating....


ALSO, how are you paying? Seems to me the cost of making those payment is more than you are getting back....

Finally, really.... you have nothing better to do to get $2
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Old 10-02-2015, 11:24 AM   #13
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It kind of strikes me like taking pennies from the tray on the store counter, but never leaving them. You can probably accumulate $2 over a year that way if you pay cash at convenience stores. Pump $20.04 of gas every week, pay $20 and grab 4 cents 50 times a year.
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Old 10-02-2015, 11:29 AM   #14
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OP,

A potential LBYM tactic, but have you already optimized your cell phone bill yet?
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Old 10-02-2015, 11:41 AM   #15
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What about that "Office Space" idea, maybe that has merit too. If we can keep it to just a $2 gain, nobody would notice.
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Old 10-02-2015, 11:56 AM   #16
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Again... why?

If you are putting the info in correctly, then you should put that you paid $2 of estimated taxes for the year.... not $4....
I see what he is getting at. If a person is making estimated tax payments anyway, and all such payments are rounded to the nearest dollar (that's what TT does), then when you decide on your payment amount, it makes cents (ugg) to make the payment in $$x.50 increments. It doesn't cost any more to do it this way. I don't know if TT (and other software) rounds the >yearly< total paid, or each quarterly payment (so maube you'd just chisel off 50 cents rather than $2). And, as mentioned by others, I don't know if this the kind of thing that gets the IRS's attention. That's not worth 50 cents or two bucks.
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Old 10-02-2015, 01:34 PM   #17
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I see what he is getting at. If a person is making estimated tax payments anyway, and all such payments are rounded to the nearest dollar (that's what TT does), then when you decide on your payment amount, it makes cents (ugg) to make the payment in $$x.50 increments. It doesn't cost any more to do it this way. I don't know if TT (and other software) rounds the >yearly< total paid, or each quarterly payment (so maube you'd just chisel off 50 cents rather than $2). And, as mentioned by others, I don't know if this the kind of thing that gets the IRS's attention. That's not worth 50 cents or two bucks.

Decided to check TT....

You input each quarter and it rounds each quarter.... so an error in TT...

Still, the OP talked about making payments of 50 cents... not rounding a payment to the 50 cents increment....

So yes, if you are making payments anyhow.... and using TT (can not check any other software, but will assume it is the same), then if you make the 50 cent payment and round each payment up to the next dollar you make $2....

I doubt the IRS cares at all.... but if someone noticed it during an audit I bet they would get the $2 back.... IOW, you know the total you paid... and you know that the amount in TT is wrong.... you can round down two of the 4 payments so the total is correct....


But heck, I have already wasted much more time on this potential saving of $2 than I want.... still not worth it to me...
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Old 10-02-2015, 01:45 PM   #18
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Again... why?

If you are putting the info in correctly, then you should put that you paid $2 of estimated taxes for the year.... not $4....
Why would I not take 1 hundredth of one second when I make an estimated tax payment to subtract 50c and keep some more money?
Did you miss the fact that if you tell a tax pro you made these estimated tax payments when he inputs the data it will round? Others are saying if you enter the data yourself in turbotax it will round? Estimated tax payments do appear split out in at least one other form.

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Now, if you owe a penalty you can put down that you paid $1 per quarter and the two numbers not match due to rounding....
Putting down $4 is cheating....
If you owe an underpayment penalty then the estimated taxes appear on a form as 4 separate values. All rounded up!!!! So the penalty will be reduced by rounding up of up to two dollars.

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ALSO, how are you paying? Seems to me the cost of making those payment is more than you are getting back....
Like I already said in the last message I am using EFTPS and that's free. It lets me send pennies. So why shouldn't I.

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Finally, really.... you have nothing better to do to get $2
I can't think of anything more profitable to do in 100th of a second just after I type in my estimated tax payment that would make more money.
I made a couple of dollars metal detecting in the local park this morning but that took me an hour.
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Old 10-02-2015, 02:04 PM   #19
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This reminds me of the saying:

"Don't pick up pennies in front of a steamroller"





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Old 10-02-2015, 04:11 PM   #20
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This reminds me of the saying:

"Don't pick up pennies in front of a steamroller"

Or "Don't poke the bear!".
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