A dumb question from a tax-code neophyte: Is all this hassle really worth it? Do you have to recompute this each quarter? I was under the impression that you could simply estimate 100% (or 110% for higher income folks) of last year's taxes and make four equal payments. Done. There's no possibility that you can owe a penalty with this approach. The interest due on underpayments is just 4%, so hanging on to any extra money until you file costs almost nothing. Overpayment is a possibilty, but even that can sometimes have a silver lining. And, over time (years) the underpayments and overpayment can be expected to roughly cancel out, so doing this kabuki-dance annually instead of quarterly in order to minimize the "float" seems unlikely to have a significant cost. Sure, it helps to know how much is likely to be due so you can have the $$ available in a liquid account, but that (to me) is a heck of a lot easier and more error-tolerant than these quarterly recomputations.Arrrgh! A new twist in my estimated tax calculations. I realized > $3000 in capital losses during the first quarter (selling bond funds to buy stocks in my January rebalance) and now I need to make sure I accurately compute my annualized income.
Audrey
Again, this probably just reflects my ignorance of the requirements or my laziness.