Procedural questions - Estimated tax payments for widow

[FEDUKE404]

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[mastertaxguy]

Often for the final joint return of a married decedent I list the surviving spouse first, decedent second, and then do any future estimated payments which will usually use the first named taxpayer SS#.

Maybe your software will produce estimated coupons with the spouse's social security number only?

[Rapid Robert]

I would just like for the client NOT to have to write any 2018 estimated payment checks and to have payment #1 reduced by the 2017 refund. Advanced age of client is also an issue for "remembering" the future payments.

Suggestions to address the problem you state above. Don't be reluctant to think outside the box of old habits.

1) do a better job of estimating so client does not have a refund.

2) surely there are opportunities for withholding, from SS or 1099-R, which would better suit a client who is not as mentally sharp these days.

Form W-4V. "When you complete the form, you will need to select the percentage of your monthly benefit amount you want withheld. You can have 7, 10, 12 or 22 percent of your monthly benefit withheld for taxes. "

3) just make one annual estimated payment in April or June. Don't sweat it if there is a small interest charge (now up to 5%, but only for the days actually underpaid) on a residual underpayment. It may be a small price to pay for the increased convenience, and partially offset by the decreased fee you would need to charge for not having to prepare and then later verify and record quarterly estimates.

[Lion]

I love the suggestions from Guy and Robert. I especially like swapping the spouse for primary on the final joint return. All of their suggestions would work in different circumstances. Pick one that fits your client's circumstances.

[taxea]

Often for the final joint return of a married decedent I list the surviving spouse first, decedent second, and then do any future estimated payments which will usually use the first named taxpayer SS#.

Maybe your software will produce estimated coupons with the spouse's social security number only?

IRS does not want the TP'S info reversed on the return. Leave the primary for the final MFJ return. As for future w/h why not submit W-4's to the income issuers that will raise the withholding sufficiently to prevent the survivor from having to pay estimated?

[taxea]

Knowing the frequent ineptness of the IRS, don't you think that if I switched the names on the pending 2017 tax return, there is a possibility (or greater!) the IRS could not "locate" any 2017 estimated payments that were made by the husband, who was primary on the 2016 (and all prior years) return when the scheduled 2017 estimates were actually scheduled at the time of efiling?

FE

You are correct...refer to my post.

[mastertaxguy]

Switching places-estimated payments by former spouse

You are correct...refer to my post.

We have not had the issue arise which you describe.

Software we use has a field to indicate payments were using a former spouse (deceased or otherwise not shown on the return) as primary on payments. We can't recall a situation where using that field caused a problem or estimated payments were not properly applied.

[Rapid Robert]

Your #1: My 2017 estimates would otherwise have been within ~$100 of actual 2017 liability, except I did not "adjust" for the client's upcoming death when originally scheduling the 2017 estimates
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The issue I originally raised is essentially a temporary, one-time issue and I just don't want to create potential problems for my client that would not be known until at least a year from now.

I understand about not including death of spouse in original estimates; however once the death occurred, if it was in the first part of the year, estimates could have been revised, or if not until the end of the year, then not much should have changed to generate an unexpected refund. I'm not faulting you, your client may not have been concerned enough to work on an update mid-year, but I have had several clients in recent years where the death of a spouse was anticpated due to terminal illness, or the death happened in the first quarter of the year, and so it was taken into account when doing estimates.

Your last point is the key one: you see it as a one-time issue, but I am advocating for thinking outside of the box and seeing it as an ongoing issue. Some of the problems you are citing could have been avoided by following some of the suggestions I posted previously, year after year.

For example, I do sometimes schedule EFW for all four estimates in advance, but you have to evaluate each client for whether or not it really makes sense to lock them in like that. For a Self Employed person, yes, but if withholding is available (which for your client it is), it's almost always is a better choice than estimated payments.

[mastertaxguy]

Interesting. . .how does the information that you enter actually impact the filed tax return itself, i.e. how does the IRS receive the extra payment information ??

FE

No sure. We have not had to paper file such a return (deceased primary taxpayer on joint return) in a while so I can't comment on that potential issue. Efiling has seemed to work out. None in our office presently recalls any recent issues with this situation.
Recall these are not extra payments, but estimated using coupons or EFT with the first name spouse who either died during the year or after Dec. 31. We did have one several years back where the surviving spouse took over paying the estimated tax payments for a joint return; do not recall any issues and no file notes of any issues.

As is true in a lot of things, recommend that with which you are comfortable.

[taxea]

We have not had the issue arise which you describe.

Software we use has a field to indicate payments were using a former spouse (deceased or otherwise not shown on the return) as primary on payments. We can't recall a situation where using that field caused a problem or estimated payments were not properly applied.

I was referring to switching the primary and secondary taxpayers at the top of the 1040 as being what the IRS does not want on MFJ returns. They want consistency of names when filing.