Accidentally paid 10x ES taxes this quarter

perinova

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The transaction is pending today and it looks like I am paying $12000 instead of $1200. I am not sure how this could happen. LOL
Did a couple of searches but it looks like the only way to get money back from the IRS is thorugh the tax return is this correct?
 
I think you will have to wait until you file (motivation to file early next year...). At least make sure you don't make any additional payments for 2024 (i.e. cancel any scheduled future payments).
A bit extreme, but you could go to t he bank and withdraw all cash so that the IRS check bounces. Then you re-deposit the cash and send a $1200 check. Don't know if IRS charge a fee for bounced check (the bank definitely will), but it MIGHT work.
 
I think you will have to wait until you file (motivation to file early next year...). At least make sure you don't make any additional payments for 2024 (i.e. cancel any scheduled future payments).
A bit extreme, but you could go to t he bank and withdraw all cash so that the IRS check bounces. Then you re-deposit the cash and send a $1200 check. Don't know if IRS charge a fee for bounced check (the bank definitely will), but it MIGHT work.
Rather than bouncing a check, can you go to the bank and stop the payment? Then re-send the estimated tax?
 
... Don't know if IRS charge a fee for bounced check (the bank definitely will), but it MIGHT work.
Yes, they do charge a penalty for a failed payment. It's 2% of the amount of the payment, so in this case it would be $240.
 
The transaction is pending today and it looks like I am paying $12000 instead of $1200. I am not sure how this could happen. LOL
Did a couple of searches but it looks like the only way to get money back from the IRS is thorugh the tax return is this correct?
I pay mine online, and I think if I deplete the $ in my bank account before the withdrawal is made, the estimated tax won't get paid. Might give you a do-over if that works. I have never tried this myself. Good luck.
 
Do you have an online IRS account? (It's somewhat of an ordeal to register via ID.me but awfully nice once you're in.) I've had good and quick responses sending a message through my account. You could message and just ask to cancel the payment so that you can try it again, maybe?
 
Use Form 1040-ES to figure and pay your estimated tax.

Estimated tax is the method used to pay tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.). In addition, if you do not elect voluntary withholding, you should make estimated tax payments on other taxable income, such as unemployment compensation and the taxable part of your social security benefits.
 
Use Form 1040-ES to figure and pay your estimated tax.

Estimated tax is the method used to pay tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.). In addition, if you do not elect voluntary withholding, you should make estimated tax payments on other taxable income, such as unemployment compensation and the taxable part of your social security benefits.
I find that too complex. So I just pay 110% of last year's taxes. Could be 100% but doing aggressive Roth conversions push up the income.
 
I find that too complex. So I just pay 110% of last year's taxes. Could be 100% but doing aggressive Roth conversions push up the income.
+1 I find it impossible to get a reasonable estimate each year that comes close to owed taxes so I have been doing the same for the past 12 years. I don't do anymore investing other than taking excess cash and buying CDs or adding to a MM fund. The variability of RMD, dividends, and interest increases every year. Even when adding to my quarterly payments each year I still seem to owe just a bit more the next year.
 
I was responding to Golden Mean's question on what it was. I should've quoted him.
I have no experience with this yet.
 
I find that too complex. So I just pay 110% of last year's taxes. Could be 100% but doing aggressive Roth conversions push up the income.
That’s fine if your taxable income doesn’t vary much, but you probably don’t want to pay a bunch extra after an unusually large income year.
 
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That’s fine if your taxable income doesn’t vary much, but you probably don’t want to pay a bunch extra after an unusually large income year.
Why not? Doesn't your alternative just mean you are handing the (same amount of ) money over early?
 
Why not? Doesn't your alternative just mean you are handing the (same amount of ) money over early?
If you've had $500 in taxes regularly you can pay $125/quarter and you are good.

Then you have year where you have a $10K tax bill. You are okay with your $125/quarter payments, and paying $9500 when you file taxes.

The next year, for safe harbor you'd have to make $2500/quarter estimated payments. If you are back to a $500 tax bill, you wouldn't want to do this and have to wait for a $9500 tax refund after filing.
 
That’s fine if your taxable income doesn’t vary much, but you probably don’t want to pay a bunch extra after an unusually large income year.
I cordially disagree.

I have a lot of post-retirement income from oil & gas royalties, and it varies by 40-60% of the total every year. I cannot ever predict what the next year will bring, so I elect to hit 110% safe harbor. That definitely means I end up paying a bunch extra at regular intervals, but I would otherwise be eyeballing things every quarter and actively worrying about it.

It does mean I have a lot more cash than I otherwise would. My Vanguard rep keeps gently asking me about it, and I have to explain that my asset allocation isn't really what she's seeing, since I have to hold a bunch of cash ready to go for the quarterly estimated checks.

I will readily admit I could optimize by calculating and filing quarterly, but I would worry about it, and that would suck.
 
If you've had $500 in taxes regularly you can pay $125/quarter and you are good.

Then you have year where you have a $10K tax bill. You are okay with your $125/quarter payments, and paying $9500 when you file taxes.

The next year, for safe harbor you'd have to make $2500/quarter estimated payments. If you are back to a $500 tax bill, you wouldn't want to do this and have to wait for a $9500 tax refund after filing.
OK, now I see it (and agree). The year following a spike in income means that a 100% or 110% would be overpaying.
 
If you are considering causing the check you wrote to the US Treasury to be dishonored, by withdrawing funds from your account, I suggest you check the applicable criminal laws in your state -- and any applicable federal laws -- to make sure you would not be committing a crime by doing this. (There are worse things than overpaying estimated taxes....)
 
One of my sisters did the same and yes you have to file a return to get it back...

She decided to book some more income than normal to offset the amount of refund....
 
OK, now I see it (and agree). The year following a spike in income means that a 100% or 110% would be overpaying.
Yeah, we sold a rental condo last year, and our 2023 tax was over 20x what it is in a normal year. If we had to pay 110% of last year's tax as estimates for 2024, our refund would be bigger than our actual income! Also, we have an estate K-1 that arrives in April, so we can't even file early to get that refund.
 
That’s fine if your taxable income doesn’t vary much, but you probably don’t want to pay a bunch extra after an unusually large income year.

Generally yes, when interest rates were 0% it wasn't an issue, but now with 5% rates, overpaying by a lot means missing out on the interest that could be earned by the $$ being held until refund.

However, I was fined $250 by estimating too low one year, so certainly don't want that issue again.
 
That’s fine if your taxable income doesn’t vary much, but you probably don’t want to pay a bunch extra after an unusually large income year.
But if we have an "unusually large income year" we're gonna end up paying anyway so what difference does it make? Pay Me Now or Pay Me Later. Frankly, aside from the safe harbor quarterly payments, I much prefer paying later...even if it's 4 or 5 figures. If we owe...we usually do...we set up our electronic filing/psyment for Aoril 15th. Our returns are done several weeks before that giving us plenty of time to round up the needed cash.

We make sure we have cash on hand.
 
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