Estimated payments

[oceanlovin'ea]

One of my clients called IRS to set up payments for what she owes on her 2006 tax return which was filed in October. The lady at the IRS informed her that she had to make payments of $144 per month on her balance. I wasn't aware that they would not take a smaller amount if that was all you could pay at the time. Next she told her that it was a law that she had to make estimated payments. My client was getting aggravated with this woman and told her that she had made estimated payments in the past and still ended up owing $2000 or $3000 at the time of filing. She also told her to make her husband take $115 more out of each paycheck to help cover the taxes.

First of all, I told her if she ever encountered such an ornery person again to make an excuse to get off the phone and then call back later and get a different person.

She is a beautician. I have told her to put back 30% of her money for taxes and send it in quarterly. But something always comes up.....hurricane damage, sick kids, sick parents, etc........ So she doesn't do it.

My question is Is there something new in the regs or new legislation that IRS is trying to enforce estimated payments? This country is full of people that would rather just pay the penalties and interest than make estimated payments. I know IRS would like people to make their estimated payments.

Thanks

Linda

[Jiggers]

Estimated Tax Payments

One of my clients called IRS to set up payments for what she owes on her 2006 tax return which was filed in October. The lady at the IRS informed her that she had to make payments of $144 per month on her balance. I wasn't aware that they would not take a smaller amount if that was all you could pay at the time. Next she told her that it was a law that she had to make estimated payments. My client was getting aggravated with this woman and told her that she had made estimated payments in the past and still ended up owing $2000 or $3000 at the time of filing. She also told her to make her husband take $115 more out of each paycheck to help cover the taxes.

First of all, I told her if she ever encountered such an ornery person again to make an excuse to get off the phone and then call back later and get a different person.

She is a beautician. I have told her to put back 30% of her money for taxes and send it in quarterly. But something always comes up.....hurricane damage, sick kids, sick parents, etc........ So she doesn't do it.

My question is Is there something new in the regs or new legislation that IRS is trying to enforce estimated payments? This country is full of people that would rather just pay the penalties and interest than make estimated payments. I know IRS would like people to make their estimated payments.

Thanks

Linda

Nothing new about enforcing estimated payments. However, the fact that she owes, and always has excuses about not paying, is why the IRS is trying to collect. That is their duty. I don't think the IRS employee was "onery".

Having more taken out of the husband's pay would surely help.

I have a client that is a beautician and she figures her net each month and takes 30% and saves it and then sends it in quarterly. She usually doesn't owe because of this.

[Bees Knees]

I think the problem here is that she wanted an installment payment option. See TTB page 15-1. You have several rules that must be followed if you want to pay your balance due in installment. One is that you comply with the tax laws while the agreement is in effect. The law requires you to pay estimated taxes. That is why you pay a penalty when you don't pay the required payments. Even though they don't send you to jail for breaking the estimated tax payment rules, you still pay a penalty, which means you are breaking the law.

[Lion]

Es

She doesn't have to wait for the ES due dates to send in her tax payments and risk spending them on something else in the meantime. Print out 12 blank vouchers for her to send in monthly or some other time frame that works for her.

[oceanlovin'ea]

She definitely needs to do estimated payments. I have talked to her about this several times. I really don't think there is a lot of cooperation between her husband and her as far as finances goes.

He is going to have to assume more responsibilities. I think the fact that he gets a paycheck which is probably direct deposit to bank and she gets cash daily tends to make her spend her money more quickly and on those immediate things like food, medicine, doctors, etc.

This does give me some things to tell her about her conversation with the IRS agent.

Thanks.

Linda F

[Bees Knees]

Some people are not capable of being self employed.

[joanmcq]

One of my really responsible SE clients puts 25% of his GROSS in his 'tax account'. Since his estimated payments always end up as less than what he's saved (he's a long haul trucker), he has a reserve to use for emergencies. However, he's a saver after my own heart, and hasn't had an emergency yet that requires dipping into the 'tax account'.