estimated taxes

[dor1500]

Estimated taxes paid for 09

0 4/15/09 200
07/15/09 200
10/15/09 200
01/15/10 200

Can the payment 1/15/10 be used on the 2009 tax return as fed taxes paid, since it is for the period sept thru dec 09.

[zeros]

Yes, if Marked for 2009

Estimated taxes paid for 09

0 4/15/09 200
07/15/09 200
10/15/09 200
01/15/10 200

Can the payment 1/15/10 be used on the 2009 tax return as fed taxes paid, since it is for the period sept thru dec 09.

If the voucher mailed in was marked for 2009.

[taxmom34]

yes, and i advise my clients who itemize to make that january payment before december 31

[BP.]

Can the payment 1/15/10 be used on the 2009 tax return as fed taxes paid

yes, and i advise my clients who itemize to make that january payment before december 31

For fed estimated payments, why? But for any state or local est payments, yes, do 'em by yr end.

[gkaiseril]

Individual tax payers are generally on the cash basis. But estimated payments for a specific year or period within a year are credited for tax payment to the period the payment is for and not when paid.

So for the federal return the 4th quarter payment is made in January +1 year for the tax year.

Where this becomes a problem, issue, or tax trick is for the state and local income tax estimated payments. The 4th quarter state payment is deductible in the tax year when paid. But the credit for the payment to the state (local) for the state (local) income estimated payments is for the tax year of the voucher. So, one can adjust the timing of the state (local) income tax deduction by making the payment before December 31 or on the January due date. But this also means one needs to also be aware of the previous tax year's state (local) income tax payment for the state's 4th quarter estimated tax payment.

[dyne]

Paying the fourth ES payment on or before Dec 31 also reduces the chance of error.
Under the current rules the first three ES payments are paid within one year and the
fourth ES payment is paid during the following year. This is just asking for problems.
By paying the fourth ES payment on or before Dec 31 every year all four payments
are paid within the same calender year. Many taxpayers will report the fourth payment made on or before Jan 15 and intended for the prior year on the current years tax return and the following Jan 15 ES payment on NEXT year's tax return causing both years to be wrong assuming the amounts from one year to the next are not the same. My father did this on his tax return. Ever since I advise my clients to pay the fourth ES payments two weeks early on or before Dec 31.

[Gretel]

For fed estimated payments, why? But for any state or local est payments, yes, do 'em by yr end.

Because some states, like Montana, use Federal taxes for their itemized deductions.

[BP.]

Because some states, like Montana, use Federal taxes for their itemized deductions.

That's neat! PA is just a flat tax; we don't itemize.

[FEDUKE404]

Why prepay feds?

Other than for unusual exceptions like MT, for the life of me I cannot conceive of any valid reason why someone would wish to prepay a 4th quarter federal estimated tax payment.

The "keep track of your payments, so just pay in December" sounds weak also. FWIW, several of my clients opt at the time of efiling to have their federal estimated payments automatically made (withdrawn from their bank) and the IRS will not allow anything other than the four "payment due dates" for those transactions.

Of course, the pre-payment of state estimates before the 12/31 date is a completely different issue and frequently can be a benefit.

FE

[Larmil]

Other than for unusual exceptions like MT, for the life of me I cannot conceive of any valid reason why someone would wish to prepay a 4th quarter federal estimated tax payment.

The "keep track of your payments, so just pay in December" sounds weak also. FWIW, several of my clients opt at the time of efiling to have their federal estimated payments automatically made (withdrawn from their bank) and the IRS will not allow anything other than the four "payment due dates" for those transactions.

Of course, the pre-payment of state estimates before the 12/31 date is a completely different issue and frequently can be a benefit.

FE

I have one client who does not pay estimates, and has had not had a penalty, although his tax liability is between $2,000 and $3,500 each year.

His source of income is IRA's and Soc. Sec. He makes his IRA withdrawals in the 4th quarter and pays his federal tax by Jan. 31st.

[FEDUKE404]

Dodging the bullet

I have one client who does not pay estimates, and has had not had a penalty, although his tax liability is between $2,000 and $3,500 each year.

His source of income is IRA's and Soc. Sec. He makes his IRA withdrawals in the 4th quarter and pays his federal tax by Jan. 31st.

I would say he has been lucky.......

Suggest you hone your skills on preparing page four of Form 2210

FE

[Larmil]

I would say he has been lucky.......

Suggest you hone your skills on preparing page four of Form 2210

FE

I have for years.

[gkaiseril]

I would say he has been lucky.......

Suggest you hone your skills on preparing page four of Form 2210

FE

As long as all of the entire tax is paid by January 31st there is no need for estimated payments. This has been the law for years.

Another approach is to have a wage job, have low or no withholding until the last quarter, and then shovel the dough to the IRS and pay some more on April 15th. As long as you do the math right, no penalty and you have had most of your money all year long.

State rule may vary.

[Larmil]

As long as all of the entire tax is paid by January 31st there is no need for estimated payments. This has been the law for years.

Another approach is to have a wage job, have low or no withholding until the last quarter, and then shovel the dough to the IRS and pay some more on April 15th. As long as you do the math right, no penalty and you have had most of your money all year long.

State rule may vary.

Been there - done that. My wife used to be my employee, so I had control over the withholding.

[taxea]

As long as all of the entire tax is paid by January 31st there is no need for estimated payments. This has been the law for years.

Another approach is to have a wage job, have low or no withholding until the last quarter, and then shovel the dough to the IRS and pay some more on April 15th. As long as you do the math right, no penalty and you have had most of your money all year long.

State rule may vary.

This is probably because the IRS has no way of knowing which quarter the income was received without auditing the clients records.
I wouldn't be surprised if they find a way to do this in the future.