Jan 2017 estimated tax payment

[broadway]

According to Quicken, the Jan. 17, 2017 payment is for income Sept. 1 through Dec. 31.

In years past I would date the check for Jan. 1 and mail it out Jan. 2 and record the payment as being paid in calendar year 2018 so it would in 2018 taxes paid.

Is this wrong?

 

[braumeister]

No, you're paying it at the beginning of the year for the prior year's taxes.

Just like you file in April to finalize the prior year's taxes.

 

[ArkTinkerer]

Not sure you meant 2018 above? You can pay your last estimated payment in December of that tax year if you want to. I think there can be some advantages if you bundle the expenses into alternate calendar years. Too late for last year of course! Been a while since I messed with stuff like that. Pretty sure some of the tax wizards here will know the ins and outs of such though.

 

[Gotadimple]

Don't think paying the Q4 taxes in 2016 qualifies as bundling expenses. The tax is due for 2016, whether you pay it in December or in January - and unlike charitable deductions, it is not eligible for Schedule A.

The comment on bundling expenses in alternate years really refers to items found on Schedule A (i.e., Medical expense, mortgage interest, etc.).

- Rita

 

[audreyh1]

According to Quicken, the Jan. 17, 2017 payment is for income Sept. 1 through Dec. 31.

In years past I would date the check for Jan. 1 and mail it out Jan. 2 and record the payment as being paid in calendar year 2018 so it would in 2018 taxes paid.

Is this wrong?

The Jan 17 2017 estimated taxes payment is for 2016 taxes.

 

[W2R]

It's easy for me to grasp that this is for my 2016 taxes, because each year I schedule the payments electronically through EFTPS in late March, for the four estimated tax payments for that year (April, June, September, and the following January).

A few years ago Audreyh1 persuaded me to try EFTPS, after much foot dragging on my part (about trying it), and it has worked flawlessly for me.

 

[scrabbler1]

I would bunch my estimated state income taxes so I could take two years of 4th quarter payments in the same calendar year and deduct them on the same year's federal return. If I wanted to bunch the 2017 year's state income taxes, for example, I would pay the 4th quarter 2016 estimated state income taxes in January of 2017, then pay the 4th quarter 2017 estimated state income taxes in December of 2017. This way, I would get two years of state income tax deductions in a single calendar year, the "bunching" effect.

 

[dixonge]

It's easy for me to grasp that this is for my 2016 taxes, because each year I schedule the payments electronically through EFTPS in late March, for the four estimated tax payments for that year (April, June, September, and the following January).

A few years ago Audreyh1 persuaded me to try EFTPS, after much foot dragging on my part (about trying it), and it has worked flawlessly for me.

Are you still employed? I didn't think retirees would have to mess with that...

 

[W2R]

If you do not have a W-2 from which taxes can be deducted, you may have to send in quarterly estimated tax payments instead. That is what we are talking about here. EFTPS is a convenient way to set up automatic estimated quarterly tax payments.

 

[audreyh1]

Are you still employed? I didn't think retirees would have to mess with that...

You don't think retirees have to pay estimated taxes? Many of us do.

 

[dixonge]

You don't think retirees have to pay estimated taxes? Many of us do.

Ah, OK. I used eftps when self-employed. Guess I will do that again soon!

 

[scrabbler1]

Remember that the 4 "quarters" are not the same length. Instead of the 3-3-3-3 months pattern, they are 3-2-3-4 months pattern. When you add to that how many mutual funds back-load their distributions with the year-end ones, it is pretty likely that the fourth period will include more than 1/3 (4/12 months) of one's investment income. In my own case, I can easily have 1/2 of my investment income (which is all my income) in the 4-month period from September 1st through December 31st.


My income tax bills are low so I pay estimated income taxes only in the 4th quarter, making it much easier to bunch that deduction. The only time I made an estimated income tax payment before the 4th quarter was when I had a huge short-term cap gain distribution in June so I made a payment for the 3rd "quarter."

 

[audreyh1]

It's easy for me to grasp that this is for my 2016 taxes, because each year I schedule the payments electronically through EFTPS in late March, for the four estimated tax payments for that year (April, June, September, and the following January).

A few years ago Audreyh1 persuaded me to try EFTPS, after much foot dragging on my part (about trying it), and it has worked flawlessly for me.

Your post inspired me to make a change today after over 10 years of using EFTPS - I switched from checking to my high yield savings account for estimated tax payments. That way I can setup the entire year of estimated tax payments too and not have to deal with it on a quarterly basis. The savings account is where I already park my funds for paying taxes. Nice simplification!

 

[W2R]

Great idea, Audrey! And by the way, thanks for talking about EFTPS way back when. I love it. It's a lot less hassle to just set it up in March and be done with it, than to remember to pay my estimated taxes just before each of the due dates.

 

[Alan]

Great idea, Audrey! And by the way, thanks for talking about EFTPS way back when. I love it. It's a lot less hassle to just set it up in March and be done with it, than to remember to pay my estimated taxes just before each of the due dates.

+1, thanks Audrey.

I've been doing EFTPS since 2011, a year after retiring. Come year end I check my estimated taxes and it is easy to log into my EFTPS account and change that last payment if necessary.

 

[audreyh1]

I was delighted to learn about it a few years after retiring (early 2000s) as I was so tired of mailing checks in - going to the post office to get a signature receipt. I always worried about a check lost in the mail.

When we went full time RVing in 2005, I went electronic on absolutely every financial transaction I could. Using EFTPS was essential, as we were traveling constantly.

 

[RunningBum]

I also like that you can change or cancel your EFTPS payments up to almost the last minute. I forget now if it's state or federal, but one of them I think I have to cancel and schedule a new payment, and the other I can just change. So I set up all four payments for both when I do my taxes, assuming I'm not racing the Apr 15 deadline, and don't worry if my estimates were off for whatever reason.

 

[target2019]

Think of estimated tax payments as 2016-1, etc. Payment 2016-4 applies to tax year 2016. Make a note on the check, in a file, etc., and you won't make a mistake.

 

[Alan]

I also like that you can change or cancel your EFTPS payments up to almost the last minute. I forget now if it's state or federal, but one of them I think I have to cancel and schedule a new payment, and the other I can just change. So I set up all four payments for both when I do my taxes, assuming I'm not racing the Apr 15 deadline, and don't worry if my estimates were off for whatever reason.

Federal is the one you have to cancel and enter a new payment. No big deal really.