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Context: US Federal Personal (non-business) income taxes

  1. Other than giving the government an interest free loan for some number of months, are there any penalties or downsides for "playing it safe" and overpaying estimated taxes / paying them when an annual return would be sufficient? I imagine the gov is more than happy to accept the money.

  2. What happens if you pay a quarter "late" but you weren't required to pay estimated taxes at all? My guess is that since 0 tax was actually due there would be no penalties or interest assessed (though none refunded either)

As I understand it, come annual tax time in April, these payments would be added to any withholding and netted against the actual tax due, reducing payment due at that time or potentially yielding a refund.

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    Overpaying taxes and the consequent excessive refund is an audit risk. At minimum, it suggests to the IRS you don't know how to do your taxes. – user71659 Apr 26 '18 at 4:09
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    Most people don''t know how to do their taxes and I doubt that over payment of taxes leads to audits. Audits are caused by improper claims, excessive deductions, failure to report income, math errors on a return, etc. The everyday Joe experiences a fraction of the audits that the affluent and wealthy do. – Bob Baerker Apr 26 '18 at 10:58
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There is no penalty for over payment of your estimated taxes. There is one for late or under payment. You can avoid the penalty if you owe less than $1,000 in tax or if you paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller. Google IRS Topic #306 for more specific details.

Form 1040-ES provides the due dates for payments as well as a worksheet for calculating your quarterly estimateds.

  • and you can fulfill this minimum obligation by paying enough in the fourth quarter, which in practice means before Jan/31 (of the next year). – Aganju Apr 26 '18 at 15:33
  • Is there a penalty for late ES payments if none were required to begin with? (part 2 above). Basically, can paying ES taxes, even if late, bite me? – arcyqwerty Apr 27 '18 at 1:38
  • There can't be a penalty if nothing was owed. – Bob Baerker Apr 27 '18 at 2:10
  • @Aganju: very rarely. If you need estimated payments at all you must normally pay one quarter each Apr 15, June 15, Sep 15, and Jan 15 (Jan 31 only if you file and pay all tax owed). You can backload the payments only if you prove on 2210-AI that for each 'quarter' you paid 90% of the tax on your income through that quarter projected to the full year, so you can pay all in Jan only if all your income is in the last 4 months of the year -- which only happens for some seasonal businesses. OTOH withholding anytime during the year (up to Dec. 31) is counted as even throughout the year. – dave_thompson_085 Apr 27 '18 at 11:37

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