Oops. IRS quarterly payments were due 9/15

[happy2bretired]

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.

That's what I do. I know most people on this board probably think I'm letting Uncle Sam use my money too long, but it works for me.

 

[audreyh1]

Nothing wrong with simple especially when income is evenly distributed over the year, and who cares about a small amount. The only reason I go to all the trouble is that otherwise I would WAY overpay as I have no pension, my income is completely unpredictable, and is not evenly distributed over the year but rather bunched at the end.

Audrey

 

[audreyh1]

BTW - since this thread has turned into a discussion of strategies for paying estimated taxes, folks might find the thread from April of this year useful:

http://www.early-retirement.org/forums/f28/calculating-estimated-taxes-2008-2009-a-43407.html

Audrey

 

[Stevewc]

If you earn money randomly throughout different quarters, don't forget to file the form 2210 (i think it is). This basically show the IRS when (date)you earned the money. One year that form was not sent in (online file no less). The form was sent behind the original tax filing, I think one day later. The IRS didn't get the 2210 form attached to my 1040 for some reason. I think it took me a year to get it straight and get my money (10K) back, that I was penalized. That was after moocho letters back and forth. It is so much fun to get letters in your mail all year from the IRS. I'm kind of getting use to it now. Seems every year I manage to need to do an amendment or something.
Before long we will be on first name basis
Steve.
PS. One good thing, it doesn't freak me out like it did the first time !!!

 

[audreyh1]

Fortunately, Turbo-tax remembers to do that form 2210 for we when we do our 1040.

Audrey

 

[Stevewc]

Fortunately, Turbo-tax remembers to do that form 2210 for we when we do our 1040.

Audrey

That's interesting, since I was paying someone to do my taxes and helped me goof mine up.
Steve
PS. We always did our own taxes. We made a small mistake one year and decided to pay someone to do them. Worked out just great, they made a much bigger, more costly mistake for us.

 

[bizlady]

To avoid penalty with the IRS, you need to have paid or had with held either 90% of what your tax liablity is for the tax year (2009 currently), or 100% of what your tax liabiltiy for the previous year was (2008). This assumes your taxable income is under $150k and that you make payments on time.

Rules are different if your taxable income is greater than $150,000

 

[audreyh1]

That's interesting, since I was paying someone to do my taxes and helped me goof mine up.
Steve
PS. We always did our own taxes. We made a small mistake one year and decided to pay someone to do them. Worked out just great, they made a much bigger, more costly mistake for us.

It's really incredible that a tax professional would miss the need to file the 2210.

If I remember correctly, in Turbo-tax we put in what taxes we paid and when during the year, and the Turbo-tax does the 90% check, check against previous years taxes, and notices whether the amounts are evenly distributed through the quarters and then flags if the 2210 is necessary to avoid penalty.

Something like that. If you just put in the total taxes paid it might not catch it.

Audrey

 

[walkinwood]

This forum is great on so many levels!

I believe we all need to do our own homework, but there is so much knowledge here to point people in the right direction. Having always had a steady job, this is the first time I'm hearing about the 2210.

Thank you all.

 

[MJ]

I have been using eftps for several years. Since I live overseas, it's a great way to schedule and pay not only my estimated tax but any tax I owe on my 1040 return. You can schedule all your payments way in advance for the date that they are due.
Since I keep track of all my income on a spreadsheet, I know how much quarterly income I earned 2 weeks before the estimate is due. Using my free Taxact software form 2210, I determine the minimum tax I need to send without incurring a late penalty. I would rather owe the IRS money on April 15th than overpay during the year.

 

[BOBOT]

We installed a new heat pump system this year which qualifies for the gummint subsidy, so not only do we not need to to file estimated qrtly pmts, we'll actally get a substantial refund from the feds for the first time in ~35 years. Wish the same were true of our state taxes .