Paying Estimated Taxes: 1st Time How-To?

[clobber]

Otherwise, she can set up (which she should anyhow) a login for irs.gov and in the site she can make estimated payments without any previous year validation of AGI, because they know it's her.

Okay, I do see that as an option. Hopefully the signup process with ID.me goes reasonably smooth. We will probably try this later. Thanks for the tip.

 

[rk911]

we've been using https://www.eftps.com/eftps/ to pay our quarterly estimates. we use the "safe haven" method (100% or 110% of previous years tax bill) with zero problems.

 

[scrabbler1]

I have been using the Directpay system since 2017 (2016 tax year, 4th quarter, the only one I use to pay estimated taxes). For state estimated taxes, I began using their electronic payment system since 2014. Both work great, with no problems.

 

[clobber]

Okay, I do see that as an option. Hopefully the signup process with ID.me goes reasonably smooth. We will probably try this later. Thanks for the tip.

Sadly it did not work. Could not verify using ID.me.

We resorted to making a debit card payment.

 

[COcheesehead]

Yes, she was going to try EFTPS until I read that they have to send you something in the mail which takes a week or more. And then the problem becomes the "1040" address. She did file in 2021, but not 2020. When signing up for EFTPS I wonder what it asks for. Did not get that far.

That system requires a PIN, that is what is sent in the mail. IRS Direct Pay requires no PIN.

 

[clobber]

That system requires a PIN, that is what is sent in the mail. IRS Direct Pay requires no PIN.

Yes, I saw that. But if it asks all the same stuff as the IRS account did - before sending a pin in the mail - then that is not going to work either.

 

[COcheesehead]

Yes, I saw that. But if it asks all the same stuff as the IRS account did - before sending a pin in the mail - then that is not going to work either.

So back to my original answer then - send a check. No checks? Send a money order.

 

[clobber]

So back to my original answer then - send a check. No checks? Send a money order.

We resorted to making a debit card payment.

 

[COcheesehead]

We resorted to making a debit card payment.

Did they charge a fee?

 

[clobber]

Did they charge a fee?

$2.50 or so. Much less that credit card.

 

[audreyh1]

I've been using https://www.eftps.gov/eftps/ to make payments as needed.

Same here. You schedule them ahead of time.

Setting up an account might take some time.

 

[MissMolly]

Yes, I saw that. But if it asks all the same stuff as the IRS account did - before sending a pin in the mail - then that is not going to work either.

It does not ask all those questions. It’s very easy and quick to use.

 

[WWDog]

I've been sending checks for years and never had a problem. I do send it about a month or so early so I can see that it was cashed by the IRS and I have sufficient time to fix it if there is a problem.

 

[meleana]

If it’s not a lot of money don’t do estimated taxes. She can keep her money and just pay the penalty when she files her taxes next year.

Our son owed $2200 for last year. He holds a second job which has variable income. He really didn’t want to deal with paying taxes ahead of time and I told him the penalty is probably not that much and he could invest the money now instead of giving it to the IRS a head of time.

 

[Koolau]

Back when we needed to do estimated, our accountant printed "vouchers" or some such to go with the checks.

I'd consider upping withholding to avoid estimated payments. Yeah, you may have to get back extra at year's end, but easier for us than remembering the quarterlies. You don't want to miss one (not the end of the world but it'll cost you.) YMMV

 

[FlaMariner]

If it’s not a lot of money don’t do estimated taxes. She can keep her money and just pay the penalty when she files her taxes next year.

Our son owed $2200 for last year. He holds a second job which has variable income. He really didn’t want to deal with paying taxes ahead of time and I told him the penalty is probably not that much and he could invest the money now instead of giving it to the IRS a head of time.

That's what we do. The penalty is minimum compared to the hassle of wondering if the IRS credits our account and remembering to do it.

We just settle up and pay the penalty every 4/15.

(I think the penalty is 3%...but others can correct me....it's subject to change quarterly)

 

[EastWest Gal]

I’ve been doing estimated tax payments for years, by check, using vouchers printed out by my accountant. But the IRS has the vouchers on its website.

https://www.irs.gov/forms-pubs/about-form-1040-es

You can mail a check with the voucher. It’s not late if postmarked by the due date. Put “form 1040ES” and you SSNs in the memo area of your check.

I switched to electronic format this year for both state and federal.

I put a calendar reminder in about 15 days before the due date. It’s in the calendar forever unless I delete it, and repeats daily until the 15th of April, June, September, and January.

 

[Rianne]

Back when we needed to do estimated, our accountant printed "vouchers" or some such to go with the checks.

I'd consider upping withholding to avoid estimated payments. Yeah, you may have to get back extra at year's end, but easier for us than remembering the quarterlies. You don't want to miss one (not the end of the world but it'll cost you.) YMMV

Is there much of a difference between withholding and paying the vouchers all at once for next year's taxes? They're both an estimation of what you owe, right? Our accountant prints the vouchers and we pay the full amount to avoid missing payments.

 

[JoeWras]

Is there much of a difference between withholding and paying the vouchers all at once for next year's taxes? They're both an estimation of what you owe, right? Our accountant prints the vouchers and we pay the full amount to avoid missing payments.

If you pay early, it isn't a problem. Pay it all with a refund? Not a problem.

If you pay quarterly on time in the safe harbor zone, not a problem. Your accountant probably puts you on safe harbor. Sure, you can pay it all at once early. IRS is OK with that, as long as the payment meets the Q1 deadline.

If you pay it all through withholding, no matter what time of the year, not a problem.

The issue is if you pay in a method other than withholding late in the year when you accrue the income early in the year.

You can pay late in the year if you get income late in the year, then you just need to file an extra, somewhat complicated, tax form.

 

[scrabbler1]

If you pay early, it isn't a problem. Pay it all with a refund? Not a problem.

If you pay quarterly on time in the safe harbor zone, not a problem. Your accountant probably puts you on safe harbor. Sure, you can pay it all at once early. IRS is OK with that, as long as the payment meets the Q1 deadline.

If you pay it all through withholding, no matter what time of the year, not a problem.

The issue is if you pay in a method other than withholding late in the year when you accrue the income early in the year.

You can pay late in the year if you get income late in the year, then you just need to file an extra, somewhat complicated, tax form.

This is what I have done, except that I don't include Form 2210, the somewhat complicated tax form, because it has, in some years, oddly shown that I should have made 1 or more payments earlier in the year even though I was on pace to be in a safe harbor by the end of the year while paying zero until the 4th quarter. IOW, why should an unexpected income spike at the end of the year cause a penalty for non-payments earlier in the year? Filing Form 2210 only exposes an undeserved penalty, and I am surely unwilling to falsely confess to owing it!

 

[JoeWras]

This is what I have done, except that I don't include Form 2210, the somewhat complicated tax form, because it has, in some years, oddly shown that I should have made 1 or more payments earlier in the year even though I was on pace to be in a safe harbor by the end of the year while paying zero until the 4th quarter. IOW, why should an unexpected income spike at the end of the year cause a penalty for non-payments earlier in the year? Filing Form 2210 only exposes an undeserved penalty, and I am surely unwilling to falsely confess to owing it!

That's why I try to avoid this somewhat complicated tax form, because it oddly shows weird stuff!

I usually just do safe harbor quarterly payments and be done with it. This was easier during zero interest rate times.

However, I may change my tune if interest rates skyrocket like it is 1982. In that case, I'll somewhat complicate my life doing all my business in Q4, file 2210, and hope I don't expose any oddly shown expectations of early required payments.

 

[Koolau]

Is there much of a difference between withholding and paying the vouchers all at once for next year's taxes? They're both an estimation of what you owe, right? Our accountant prints the vouchers and we pay the full amount to avoid missing payments.

Of course with withholding, you have to calculate carefully which is a pain to me - so I just "over do" it to be certain. A couple of times, we got dinged for paying MORE than the required quarterlies because our income had changed mid year and we didn't want to underpay. I wrote them, told what happened and they relented (that may have actually been my state taxes - I can't recall.)

 

[Bruno]

My tax lady told me as long i pay more in taxes this year than last year i can pay it in april 2023.

 

[Tadpole]

Like some others here I use EFTPS. I have used it for years. My taxes are simple enough that I can make fairly accurate guesses of my federal tax. EFTPS allows me to pre-schedule the payments so they won't be forgotten or be late. If the estimate needs modification later on, it is easy to modify.

 

[FLJim]

Eftps

We set our estimated tax payments up in the EFTPS system. It appears to be a different system than direct pay. I used both this year as direct pay would only allow two payments to be scheduled at on time. EFTPS will allow me to do all 4 at one time spread each quarter. That might be another avenue to try. It's been a while since I created the EFTPS account, but as I recall, they mailed something to my 1040 return address for me to verify and then I was in.

I have used EFTPS for a long time. Great way to pay with direct pay EFT from your designated account. Schedule all 4 payments with one visit to the site and just make sure there are enough funds in the account

https://www.eftps.gov/eftps/direct/EftpsHome.page