Oops. IRS quarterly payments were due 9/15

[IndependentlyPoor]

If you are FIREd you likely make quarterly I.R.S. payments. If you are like me it slips your mind.

 

[jdw_fire]

i set an alarm last year about this time and have set 1 for next year now

 

[kaneohe]

Fortunately (I think) the only "penalty" is interest for being late so if only a few days, not so big a deal.

 

[W2R]

Being new to quarterly payments, I sent mine in a couple of weeks ago.

I'm sure I'll get more cavalier about it after a few years!

 

[haha]

I've been making quarterly payments for 40 years. I use a calendar to help me- formerly a daily planner but now an online version.

Ha

 

[audreyh1]

I have each quarter set up as an annual scheduled payment in Quicken so I get reminded 15 days in advance.

It's also in my computer calendar for every year. That notifies me too. That's the easiest way to deal with it - haven't missed one yet in the last 10 years!

W2R - check out eftps.gov. That way you don't have to "send" anything, just schedule a withdrawal for the day due.

Sometimes we remind each other on the forum. I'll try to do that more often, but don't count on me!

Audrey

 

[W2R]

Thank you, Audrey!! That is EXACTLY what I need. Much appreciated.

 

[Gotadimple]

Thank you, Audrey!! That is EXACTLY what I need. Much appreciated.

It takes a few weeks to get enrolled, but it is very easy after that. I made my first payment on the 15th. I've got a reminder set up on a calendar program I use.

-- Rita

 

[audreyh1]

Thank you, Audrey!! That is EXACTLY what I need. Much appreciated.

It's super convenient once it is all set up. And you can schedule things as late as the day before, which is wonderful.

Audrey

 

[Rustward]

...
W2R - check out eftps.gov. That way you don't have to "send" anything, just schedule a withdrawal for the day due.
...

But don't wait until the last minute. It can take a couple of weeks to do the initial setup. Works great.

 

[walkinwood]

This is my first year of ER and I have a couple of questions on estimated taxes

1. Do I have to pay estimated taxes even if my distributions TO DATE are below the income levels that are taxed?

2. If I plan to make a transfer from my IRA to a ROTH later this year, do I have to pay estimated taxes on that amount now?

Any advice is much appreciated. And thanks for bringing this topic up.

 

[WhoDaresWins]

Uh-oh, I guess the post office lobby will be the first order of business tomorrow morning. Do you think a smiley-face sticker on the envelope will have any leverage?

 

[ERD50]

W2R - check out eftps.gov. That way you don't have to "send" anything, just schedule a withdrawal for the day due.

Audrey

I recc that also. You still need a reminder to have the balance available in the account though. Something about bouncing a check to the Feds that made me very nervous!


-ERD50

 

[Bikerdude]

This is my first year of ER and I have a couple of questions on estimated taxes

1. Do I have to pay estimated taxes even if my distributions TO DATE are below the income levels that are taxed?

2. If I plan to make a transfer from my IRA to a ROTH later this year, do I have to pay estimated taxes on that amount now?

Any advice is much appreciated. And thanks for bringing this topic up.

Technically you are supposed to make 4 payments based upon your estimated income (and projected tax) for the year. The IRS likes to get paid as soon you do. However, if you have an unexpected taxable event just pay the tax at next quartly due date and you should be OK. The more you make and owe in taxes the more the IRS looks at you IMO.

 

[Texas Proud]

If you are FIREd you likely make quarterly I.R.S. payments. If you are like me it slips your mind.

Just send in the check ASAP and when you fill out your return put it down that it was paid on 9/15... I had been told there is a few days 'window' for a payment being pegged as late...

If they do put it down as late... you might pay some penalty for late payment... try and figure out the rules for doing the penalty... you might be able to get around it by paying more on 1/15 and not have to figure it out quarterly.... (this is just thinking outside the box.... I have not done taxes in 25 plus years except mine and my boss)....

 

[audreyh1]

I recc that also. You still need a reminder to have the balance available in the account though. Something about bouncing a check to the Feds that made me very nervous!


-ERD50

Well of course! I never schedule the payment until I've made sure sufficient funds will in be the bank account on that date.

 

[audreyh1]

This is my first year of ER and I have a couple of questions on estimated taxes

1. Do I have to pay estimated taxes even if my distributions TO DATE are below the income levels that are taxed?

2. If I plan to make a transfer from my IRA to a ROTH later this year, do I have to pay estimated taxes on that amount now?

Any advice is much appreciated. And thanks for bringing this topic up.

You do not have to pay estimated taxes until you actually realize the income. So, when you take an action, the taxes are due after the close of that quarter. Estimated taxes due on actions taken the rest of this year aren't due until Jan 15 of 2010.

Question 1 - you really need to read the IRS publication on the topic. It's an easy read. There is a concept of "annualized income" whereby the income received in the 1st quarter is multiplied by 4 to calculate taxes due, and then you pay slightly less than a quarter of the taxes on that annualized amount. The subsequent quarters are similarly pro-rated. That can push income into a higher tax bracket at first.

Audrey

 

[walkinwood]

Thanks Audrey. I spent some time reading up on estimated taxes last night. I don't quite associate "easy read" with IRS documents

I also have to re-read the threads on IRA to ROTH transfers. For those interested, here are two threads on the bogleheads board.
Bogleheads :: View topic - Roth IRA conversion
Bogleheads :: View topic - The mechanics of Traditional IRA to Roth IRA transfers

 

[joeprintz]

IRS Site

Th IRS has a wonderful web site. Can schedule payments up to a year in advance. No charge. Great for travel, scheduling quarterly payments, etc. Has really simplified my life.

https://www.eftps.com/eftps/

 

[audreyh1]

Thanks Audrey. I spent some time reading up on estimated taxes last night. I don't quite associate "easy read" with IRS documents

IRS 2009 Form 1040ES instructions answer some of your questions, especially the "Who Must Make Estimated Tax Payments" question (if you expect to owe at least $1000 in tax for 2009 that won't otherwise be withheld - but definitely review the details). It has the relevant tax tables, etc. http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Publication 505 is the more comprehensive one - the "bible". It's really pretty straightforward and includes some very useful examples. It doesn't get updated as quickly as the 1040ES form for new year tax tables, etc. http://www.irs.gov/pub/irs-pdf/p505.pdf

Audrey

 

[Animorph]

I used eftps.com to automatically make payments for me for the year. I scheduled each one to be made a couple of days early. That has worked nicely.

 

[audreyh1]

I schedule it for the actual day it's due. I usually go to the website about 5 days ahead to schedule the payment (although I could do it the day before), but it doesn't get pulled out of my account until the day it's due. I like that - why pay early?

Audrey

 

[Gotadimple]

I like that - why pay early?

Audrey

The only advantage to paying early is if you know there will be a penalty. It does give a small credit in the penalty calculation. But! If you go to the work of setting up the payment calendar and determine the approximate payment amount, there shouldn't be a penalty to worry about.

-- Rita

 

[beowulf]

Thanks for the link Audrey. It seems that those of us with pensions that allow withholding can finesse this by simply having enough withheld from the pension to ver any taxes on it plus any other withdrawals we make from 401Ks, etc., that would be subject to tax. It would reduce the amount of the pension each month, but no worse than having to come up with the money every quarter. I've never been self employed or in a job where taxes were not withheld, so the idea of doing a quarterly return seems less attractive than just having enough withheld monthly to cover any extra withdrawals from other sources. Plus, I can always up the amount later in the year to make sure I don't owe.

I don't know for sure, but it looks like the main thing is not to owe more than $1K at tax time, no matter what the cash flow was during the year. Are there any programs that will figure your taxes on a running basis and all you have to do is update income and deductions each month?? That would be very handy for retirees.

 

[audreyh1]

If most of your money is coming from things that can withhold taxes for you, then that does simplify things tremendously.

I haven't found any such program. Annoying - as I would use it! I've had to do my own spreadsheets based on the tax forms.

For estimating taxes lot of people just take the previous year's tax and divide by four to estimate the current year's estimated tax payments. This works well if you have about the same income each year and if your income is fairly evenly spaced out during the year.

My income each year varies widely and most of it tends to be lumped in the 4th quarter, so I use the annualized income method and calculate the actual taxes due each quarter.

Audrey