Adjusting Estimated taxes for improved rates

[grasshopper]

As I look over the next 6 months income guess, I see interest income coming for the next 6 months, double or triple of my spreadsheet estimate.

May send a little money along to the IRS.

 

[SecondCor521]

I'm unclear.

Which interest rates are you referring to?

I don't see how sending money to the IRS in estimated taxes is impacted by interest rates. The IRS generally won't pay you interest on estimated taxes; they will pay interest (at a pretty low rate) on the refund amount, but only if your refund is delayed and it usually isn't delayed.

 

[jollystomper]

I'm unclear.

Which interest rates are you referring to?

I don't see how sending money to the IRS in estimated taxes is impacted by interest rates. The IRS generally won't pay you interest on estimated taxes; they will pay interest (at a pretty low rate) on the refund amount, but only if your refund is delayed and it usually isn't delayed.

My guess - the OP is referring to his own reported interest income rising enough to warrant sending in more estimated taxes due to the rise.

 

[Jerry1]

I would pay in according to to safe harbor rules and leave it at that. Avoid penalties and interest but pay no more to the IRS any sooner than necessary. I assume your current estimated payments are keeping you safe. I’d leave it at that if that’s the case.

 

[SecondCor521]

My guess - the OP is referring to his own reported interest income rising enough to warrant sending in more estimated taxes due to the rise.

Ah, that makes sense. Good on the OP for having enough interest income to matter!

+1 to @Jerry1's suggestion about safe harbor.

 

[jimbee]

I would pay in according to to safe harbor rules and leave it at that. Avoid penalties and interest but pay no more to the IRS any sooner than necessary. I assume your current estimated payments are keeping you safe. I’d leave it at that if that’s the case.

I agree with this, I only pay the safe harbor amount and settle up when filing.

 

[mrfeh]

As I look over the next 6 months income guess, I see interest income coming for the next 6 months, double or triple of my spreadsheet estimate.

May send a little money along to the IRS.

I use a spread sheet to calculate estimated taxes, and yes, the cells related to interest from savings accounts have been updated recently.

 

[pb4uski]

If you are doing Roth conversions to a particular target like I and many others here are then paying in additional taxes is unnecessary, it would just slightly reduce the Roth conversion that I do in December to top up my Roth conversions for the year to hit my taxable income target.

 

[jebmke]

I just send the safe harbor amount and then re-evaluate in December when I know the final number. Adjust Q4 accordingly if over w/h. It would be unusual for me to be off by an entire payment and over w/h with three payments.

 

[scrabbler1]

I agree with Jerry. Depending on which safe harbor provision I am seeking to meet, I may try to leave a small cushion in case I miscalculate.

 

[N02L84ER]

If you are doing Roth conversions to a particular target like I and many others here are then paying in additional taxes is unnecessary, it would just slightly reduce the Roth conversion that I do in December to top up my Roth conversions for the year to hit my taxable income target.

This is what we do although the Roth conversions had to change to beneficiary IRA withdrawals last year and for the next 9 years.