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Making quarterly tax payments to the IRS?
01-17-2021, 11:44 AM
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#1
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Full time employment: Posting here.
Join Date: Apr 2016
Location: warren
Posts: 935
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Making quarterly tax payments to the IRS?
Since my wife retired this year we now are both retired. This will seem like a very basic question but I've never had to consider it before. How do you make quarterly tax payments to the IRS? Do you just send a check to the IRS and note "quarterly tax payment" on the check? And where do you send it?
Also, I don't expect we'll owe any taxes for the next couple years, or very little ( like under a couple hundred bucks). Do we still need to make quarterly payments? Sorry for what are probably very rudimentary questions but it's all new to me.
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01-17-2021, 11:47 AM
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#2
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,057
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Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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01-17-2021, 11:59 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: NW Pennsylvania
Posts: 1,811
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Quote:
Originally Posted by garyt
Since my wife retired this year we now are both retired. This will seem like a very basic question but I've never had to consider it before. How do you make quarterly tax payments to the IRS? Do you just send a check to the IRS and note "quarterly tax payment" on the check? And where do you send it?
Also, I don't expect we'll owe any taxes for the next couple years, or very little ( like under a couple hundred bucks). Do we still need to make quarterly payments? Sorry for what are probably very rudimentary questions but it's all new to me.
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If you’re comfortable with it, there are a couple ways to make your quarterly payments online. I have them automatically deducted from my bank account. I use
https://www.eftps.gov/eftps/index.jsp
If you don’t owe any taxes, you do not need to make estimated payments. I seem to recall that you also don’t need to make payments if you owe under a certain amount, but I’m not sure. Check the IRS instructions.
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01-17-2021, 12:48 PM
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#4
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Full time employment: Posting here.
Join Date: Apr 2016
Location: warren
Posts: 935
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Thanks for the replies
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01-17-2021, 12:50 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,866
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Quote:
Originally Posted by PaunchyPirate
I seem to recall that you also don’t need to make payments if you owe under a certain amount, but I’m not sure. Check the IRS instructions.
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Correct. The IRS has several safe harbor rules. If you meet those safe harbors then you will not owe an underpayment penalty. The underpayment penalty is pretty much the main reason people do quarterly estimated taxes. (Another minor reason might be to even out cash flow.)
One of the safe harbor rules is that if you owe less than $1,000 when you file your taxes (total taxes owing minus any withholding). There are several other safe harbor rules. Meeting any one or more of the safe harbor rules is sufficient to prevent the assessment of an underpayment penalty.
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"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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01-17-2021, 01:13 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,501
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Glad you brought this up.
Not to hijack but....
I just have taxes withheld from IRA withdrawals. Am I going to cause myself an issue not filing quarterly?
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
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01-17-2021, 01:20 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Santa Paula
Posts: 4,070
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Quote:
Originally Posted by PaunchyPirate
If you’re comfortable with it, there are a couple ways to make your quarterly payments online. I have them automatically deducted from my bank account. I use
https://www.eftps.gov/eftps/index.jsp
If you don’t owe any taxes, you do not need to make estimated payments. I seem to recall that you also don’t need to make payments if you owe under a certain amount, but I’m not sure. Check the IRS instructions.
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I recommend EFTPS. I have been using them for years. I schedule my payments a few days before they are due, and the payment is deducted from my bank account.
This is what the entry on my account looks like: IRS USATAXPYMT 011121 27014XXXXX(My name).
I also pay my CA estimated tax the same way.
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Retired Jan 2009 Have not looked back.
AA 60/35/5 considering SS and pensions a SP annuity
WR 2% with 2SS & 2 Pensions
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01-17-2021, 01:23 PM
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#8
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Moderator
Join Date: Jul 2017
Posts: 5,665
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Quote:
Originally Posted by Alan
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I send in this form on a quarterly basis (and another form particular to my State).
They have never had any problem cashing my checks.
Should I have a concern that I underpaid at the end of the year - I would have to take a withdrawal from my IRA and send the entire withdrawal over for taxes (keeping in mind that the withdrawal is taxed as well). In 2020; my entire last few paychecks went to taxes due to a concern regarding under payments/ under withholding.
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Use it up, wear it out, make it do or do without.
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01-17-2021, 01:27 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2012
Posts: 6,139
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You can also pay estimated taxes online at this IRS link: https://www.irs.gov/payments/direct-pay
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FIREd date: June 26, 2018 - "This Happy Feeling, Going Round and Round!" (GQ)
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01-17-2021, 01:30 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Coronado
Posts: 3,675
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Quote:
Originally Posted by GravitySucks
Glad you brought this up.
Not to hijack but....
I just have taxes withheld from IRA withdrawals. Am I going to cause myself an issue not filing quarterly?
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Withholding is treated as if it's done evenly throughout the year, so you will only owe a penalty if you have too little withheld. The easiest safe harbor to reach is to withhold 100% of last year's tax liability (110% if last year's AGI was over $150K).
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01-17-2021, 01:39 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
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Quote:
Originally Posted by GravitySucks
Glad you brought this up.
Not to hijack but....
I just have taxes withheld from IRA withdrawals. Am I going to cause myself an issue not filing quarterly?
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No, withholdings are considered to be evenly distributed.
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01-17-2021, 01:54 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,203
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I like EFTPS because you can schedule payments for all four quarters, and not have to remember to write a check and wonder how long it'll take to get there. Plus you can log in to your account and quickly see what you have paid so far and what you have scheduled.
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01-17-2021, 01:55 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,337
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Quote:
Originally Posted by GravitySucks
...I just have taxes withheld from IRA withdrawals. Am I going to cause myself an issue not filing quarterly?
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That works. We withdraw with zero withholding until December, when we draw & 100% withhold enough to cover our safe harbor amount. Nothing quarterly, no mathematics except to figure 110% of last year's taxes and send it in.
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Ignoramus et ignorabimus
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01-17-2021, 03:31 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,233
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Quote:
Originally Posted by OldShooter
That works. We withdraw with zero withholding until December, when we draw & 100% withhold enough to cover our safe harbor amount. Nothing quarterly, no mathematics except to figure 110% of last year's taxes and send it in.
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I do the same for my parents and DGF.
No federal tax for me yet.
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TGIM
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01-17-2021, 03:41 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Feb 2009
Location: Cville
Posts: 1,600
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I use turbo tax and they include payment forms for the next year. I know that number change some times by a lot if you do a Roth conversion or cut back on one, so I took 110% of last year tax liability and subtracted with holdings from pensions and SS and send in a check for 1/4 each quarter. Do the same for state taxes. Works easy for me till I run out of checks. When was the last time you ordered checks? Ha
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FIRE 31 Aug, 2018 - Always leave every place better than you found it, always give more than expected or Due
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01-17-2021, 04:09 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Jul 2012
Location: Texas
Posts: 3,024
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When I first retired, I used IRS Direct Pay for quarterlies, which is fast, easy, and requires no advance set-up. A few years later I switched to EFTPS, which is a much better system for tracking and scheduling. I never used checks and paper forms.
Now that I'm 59.5, I just do a December IRA withdrawal with 99% withholding (Fidelity does not allow 100% for some reason). The withdrawal amount is my safe harbor amount for the year, generally 110% of prior year tax. No quarterly payments, no penalties, no Form 2210, and better for cash flow.
Something else I recently learned on this forum is to return the withdrawal to the IRA within 60 days as a rollover. So the IRA withdrawal is not taxable, but the withholding stays. And I ultimately use taxable funds to pay tax, which is my preference since almost all of our tax liability is driven by large Roth conversions.
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Retired at 52 in July 2013. On to better things...
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01-17-2021, 04:10 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,015
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We use eftps.gov and schedule payments ahead to be withdrawn on the due date. Works for quarterly estimated tax payments as well as the final 4/15 10490 payment. So much easier than dealing with mail.
If I decide to do equal payments in a given year, I can schedule all at once. You can always go back and cancel and replace if you change your mind up to about 2 days before the payment is due I think.
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Retired since summer 1999.
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alternative to quarterlies
01-17-2021, 04:48 PM
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#18
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Recycles dryer sheets
Join Date: May 2014
Location: Big Sky Country, Montana
Posts: 287
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alternative to quarterlies
I realized on the last day of 2020 that I would be under-withheld because of some unexpected December stock sales. So I called Fidelity and had them make an IRA withdrawal with 100% of it going to state and federal withholding since I’ve never done quarterlies. I also do withholds from an RMD in the spring each year to cover my basic taxes.
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01-17-2021, 05:44 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Location: Northern Ohio
Posts: 3,182
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Learn something every day. 110% huh...
I’ve done 100% as the safe harbor amount in the past, but I guess that I had a lower agi than now. I just topped off my estimated taxes to 100% of last years. Guess there’s a penalty for me this year.
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01-17-2021, 05:53 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,866
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Quote:
Originally Posted by mpeirce
Learn something every day. 110% huh...
I’ve done 100% as the safe harbor amount in the past, but I guess that I had a lower agi than now. I just topped off my estimated taxes to 100% of last years. Guess there’s a penalty for me this year.
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It depends on your previous year AGI and filing status.
MFJ is $150K. Single and MFS is $75K. I believe HOH is $112.5K. Not sure about qualifying widower.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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