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View Poll Results: How do determine and file your estimated taxes?
I determine estimated taxes by paying last year's tax liability 24 18.46%
I determine estimated taxes by estimating this year's liability and paying 90% 27 20.77%
I use some other method 35 26.92%
I don't need to pay estimated taxes 37 28.46%
I pay estimated taxes by check 17 13.08%
I pay estimated taxes by an electronic method, like EFTPS 46 35.38%
Multiple Choice Poll. Voters: 130. You may not vote on this poll

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Old 04-12-2017, 10:00 AM   #41
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Are you using TurboTax? Sometimes I've had to open Form 2210 to get them to do all the calculations.
Yes, I'm using TurboTax, and did for 2015 as well so it should have had access to the previous year's figures. TT may have messed up. I'm about to leave on a trip and should wait till it's been received anyway before I file any necessary revisions. It's only $50 but I'll find a good use for it!
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Old 04-12-2017, 10:00 AM   #42
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I love the way that EFTPS just takes care of that. I do check my bank account on the due date to make sure it takes the money each time, but so far so good. I have my Louisiana estimated taxes set up for automatic scheduled payments the same way.

I am so glad that you posted a number of times about EFTPS, because your posts encouraged me to finally look into it. IMO, it's one of those electronic services that actually does work just as one might wish.
Well - this is the first time I have scheduled more than one payment. Finally late last year the light bulb went on, and I setup a connection to one of my high yield savings accounts instead of my checking account. Up till now I had been transferring the funds to my checking account, and then scheduling the payment.

It meant though that I had to trust the IRS with access to my savings account. Dealing for >10 years with no issues in terms of withdrawals has helped.
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Old 04-12-2017, 10:02 AM   #43
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Originally Posted by Gotadimple View Post
Attagirl! Now if you use a checkbook program (i.e. Quicken, MoneyDance), set up a reminder to automatically post the payment in the register.

- Rita
Actually - I have this too. I have all scheduled payments shown in Quicken, so I see when bills are due all the time. This is one of the biggest features I use in Quicken.

But my electronic calendar usually notifies me about quarterly payments before Quicken does. I have a few bill related things in the calendar - mostly when various statements close and I will see the new bill. Quicken has the due dates and amounts.
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Old 04-15-2017, 02:24 PM   #44
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I use the annualized income installment method typically would owe no tax were it not for Roth conversions that I do each December and make an estimated payment in January. I use EFTPS to make the payment.
If you can pay tax in January then why does everybody has to pay estimate tax. I'm thinking of doing it this way but still have question. My only concern of paying ahead is that there potential fraud. Therefore I would rather pay a bit of penalty at tax time and not having to worry about fraud.
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Old 04-15-2017, 04:07 PM   #45
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Sorry, I wasn't clear. When I say paying in January, it's the January after the end of the tax year. So, I would pay my 2016 tax with my January 2017 estimated payment.

I can do this because our income that causes us to have a tax liability is concentrated in the last quarter of the tax year, principally my Roth conversion for the year. If someone has regular income throughout the year, the approach I use doesn't work.
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Old 04-15-2017, 07:54 PM   #46
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This had me wonder: Does the IRS really concern itself with the timing of income and the associated taxes? If one met either the safe harbor or the 90% rule, would the IRS penalize you if the timing were off? Has anyone been penalized for estimating and paying the correct amount, but not in the correct 'quarters'?
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Old 04-15-2017, 08:20 PM   #47
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Yes, they do.... otherwise people would just pay their estimated taxes in the last quarter of the year.
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Old 04-15-2017, 08:58 PM   #48
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This had me wonder: Does the IRS really concern itself with the timing of income and the associated taxes? If one met either the safe harbor or the 90% rule, would the IRS penalize you if the timing were off? Has anyone been penalized for estimating and paying the correct amount, but not in the correct 'quarters'?
Yes! The IRS really does care about income timing during the year and when taxes are paid.

The safe harbor rule requires four equal payments by the quarterly deadlines. As does the 90% rule. If you start out with lower payments and make higher payments later in the year you had better show that your income was low early in the year and higher later.

There are loopholes - such as using withholding from pension or IRA withdrawal late in the year to "catch up" estimated tax payments.
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Old 04-15-2017, 09:15 PM   #49
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I estimate taxes based on my projected income for the year. I'm targeting an AGI of $40-42k so I don't owe regular income taxes (family of 5) but some of my income is self employment income, so I owe a couple thousand $ of self employment taxes. This year I'm paying $600 per quarter which should more than cover my 2017 tax liability.

I pay using a credit card to get the points (and help me meet minimum spending goals to snag credit card sign up bonuses). All in all, it takes about 5 minutes. I set a quarterly recurring reminder on my google calendar with the link to the tax payment processor, along with a note to pay $600 (or whatever my quarterly payment needs to be).

Just started making these payments last year when DW joined me in retirement, so I'm not sure if this is the absolute best process but it's pretty simple and helps me attain other goals (like spending $ on a credit card).
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Old 04-15-2017, 09:17 PM   #50
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Yes! The IRS really does care about income timing during the year and when taxes are paid.
Uh oh. I paid my April and June quarterly estimated payments at the same time (in fact, in the exact same payment). I paid $600x2 = $1200. I didn't see anywhere to designate which quarter I'm making estimated payments for. Hopefully the IRS won't mind getting the 2nd quarter payment a little early
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Old 04-15-2017, 09:25 PM   #51
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Uh oh. I paid my April and June quarterly estimated payments at the same time (in fact, in the exact same payment). I paid $600x2 = $1200. I didn't see anywhere to designate which quarter I'm making estimated payments for. Hopefully the IRS won't mind getting the 2nd quarter payment a little early
- no penalties for pre-pay of course! Only for late payments.

How is it designated? The form you mail in with each payment indicates the quarter. With EFTPS you only assign the tax year for any estimated tax payment. But in all cases, when you file your taxes you report to TurboTax, for example, the dates you made each payment and that is used to determine whether things were "on time".

If you lumped everything into one payment for two quarters, it could cause a bit of confusion (Q1 was $1200, Q2 was $0), but tax program should be able to reconcile it all and show the amount you paid was ahead of schedule.

I noticed my Dad paying his quarterly estimated taxes early, and I think he was worried about missing the dates. So this year my Dad's tax preparer had him pay for the whole year with his first quarterly payment - this is for the estimated amount above what is already withheld from his pension. She says she does this for several of her elderly clients, including her own Dad. My Dad was quite pleased with this solution.
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Old 04-15-2017, 09:37 PM   #52
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Originally Posted by audreyh1 View Post

I noticed my Dad paying his quarterly estimated taxes early, and I think he was worried about missing the dates. So this year my Dad's tax preparer had him pay for the whole year with his first quarterly payment - this is for the estimated amount above what is already withheld from his pension. She says she does this for several of her elderly clients, including her own Dad. My Dad was quite pleased with this solution.
That was kind of my thinking, too. We leave June 12 for Europe, arrive June 13 and I've found that technology doesn't always work (internet broken in the airbnb; IRS payment processor won't accept incoming Portuguese IP addresses etc) for these time critical things. So I paid ahead. One more thing crossed off the list.
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Old 04-15-2017, 10:03 PM   #53
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I hope IRS takes American Express.
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Old 04-15-2017, 10:13 PM   #54
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- no penalties for pre-pay of course! Only for late payments.

How is it designated? The form you mail in with each payment indicates the quarter. With EFTPS you only assign the tax year for any estimated tax payment. But in all cases, when you file your taxes you report to TurboTax, for example, the dates you made each payment and that is used to determine whether things were "on time".

If you lumped everything into one payment for two quarters, it could cause a bit of confusion (Q1 was $1200, Q2 was $0), but tax program should be able to reconcile it all and show the amount you paid was ahead of schedule.

I noticed my Dad paying his quarterly estimated taxes early, and I think he was worried about missing the dates. So this year my Dad's tax preparer had him pay for the whole year with his first quarterly payment - this is for the estimated amount above what is already withheld from his pension. She says she does this for several of her elderly clients, including her own Dad. My Dad was quite pleased with this solution.
At the end of the day if you look at form 2210 you find that if you are owed a refund it does not matter when you pay your estimated taxes. On form 2210 it figures the required amount typically 90% of taxes due, then sums withholding and estimated taxes and if they exceed the above amount no penalty is due. BTW the rate this year on underpayments is still 2.65%. See the form for more details I have ommitted the last years exception, since it typically is a problem only in the year after retiring.
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Old 04-15-2017, 10:15 PM   #55
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I hope IRS takes American Express.
Well yes, but you'll pay fees for the privilege - 1.87% to 2%
https://www.irs.gov/uac/pay-taxes-by...-or-debit-card

Some folks use this as a way to rack up points on their credit cards or related qualifying benefits (like 10,000 miles each year if you spend $25,000 on a United Mileage credit card).
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Old 04-15-2017, 10:19 PM   #56
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At the end of the day if you look at form 2210 you find that if you are owed a refund it does not matter when you pay your estimated taxes. On form 2210 it figures the required amount typically 90% of taxes due, then sums withholding and estimated taxes and if they exceed the above amount no penalty is due. BTW the rate this year on underpayments is still 2.65%. See the form for more details I have ommitted the last years exception, since it typically is a problem only in the year after retiring.
So someone can wait until Jan 15, pay all their estimated taxes, and as long as they overpaid a little, owe no penalty? I don't think I believe this because then everyone would do precisely that. I do believe things are checked quarterly.

If taxes weren't paid in four equal installments by the quarterly due dates, say $0, $0, $0, and $full amount, I believe you will be assessed a late penalty for the three quarters you did not pay, unless you fill out Form 2210 to say that you had no income for the first three quarters.

You may be safe if you've paid 90% of the taxes owed by Jan 15, but you still have to pay them in 4 equal installments by the quarter deadlines, otherwise you have fill out the actual income and taxes owed each quarter on form 2210 to avoid penalty.
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Old 04-15-2017, 11:54 PM   #57
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I always ignore estimated taxes, and end up paying somewhere around 1.5%-3% penalty at tax time. It's such a small penalty that I wonder why everyone puts up with the headache and effort of figuring out the estimated taxes and submitting payments on a quarterly basis.

It doesn't always work out, but most years, you'll actually do better just keeping your money in investments and then paying the penalty rather than paying estimated taxes during the year.

Perhaps your tax situation would result in a higher penalty %? Easy enough to check if you use tax software, just bring up one of your old tax returns and remove the estimated tax payments to see what your penalty would have been. My guess is that anything under 4-5%, and you're better off just ignoring it and letting turbotax automatically figure out your penalty at tax time...
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Old 04-16-2017, 01:21 AM   #58
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I carried forward part of an overpayment from 2015 to 2016 for my exact 2015 tax. This year I will withdraw some from tIRA and withhold some taxes in December. I itemize and had so many medical bills last year my total tax for 2016 was $114. Medical will be high again this year so another low tax year.
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Old 04-16-2017, 10:58 AM   #59
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At the end of the day if you look at form 2210 you find that if you are owed a refund it does not matter when you pay your estimated taxes. On form 2210 it figures the required amount typically 90% of taxes due, then sums withholding and estimated taxes and if they exceed the above amount no penalty is due. BTW the rate this year on underpayments is still 2.65%. See the form for more details I have ommitted the last years exception, since it typically is a problem only in the year after retiring.
Are you talking about the short method in Pt. III? You might have missed the instructions on top:

"Can You Use the
Short Method?
You can use the short method if:
• You made no estimated tax payments (or your only payments were withheld
federal income tax), or
You paid the same amount of estimated tax on each of the four payment
due dates
."

so audrey is correct.

also the interest rate looks to me to be 4%, not the 2.65% quoted above. The 2.65% is from the short method to be used if all payments were equal. If they were, the average time period to the mid April filing date is 8 mos. Annualizing that yields a factor of 1.5 that applied the 2.65% rate yields 3.98, close to 4%. You can see the 4% rate
in the wksht on p. 6 here https://www.irs.gov/pub/irs-pdf/i2210.pdf
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Old 04-16-2017, 12:13 PM   #60
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We did estimated tax payments for many years. Now that we're beginning RMD's, I'll just do a tax estimate late in the year and have an appropriate withholding amount taken from the IRA withdrawal. Seems easier than doing the estimate early in the year in order to decide on an amount for four estimated payments.

I still need to check with Schwab and find out how much notice they need to do the RMD by EOY. I'm hoping no sooner than Dec 1st.
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