36 votes
Accepted

If I overpay estimated taxes in Q1, am I allowed to underpay in the other quarters?

Yes. In each quarter the penalty is based on a measurement of the taxes paid vs. the required taxes from January 1 to the end of the quarter in question. As an extreme example, let's say your required ...
Stan H's user avatar
  • 6,508
31 votes
Accepted

Why pay estimated taxes?

Same argument and answer for investing instead of paying off debt, or borrowing to invest. Risk. What happens if the stocks drop by 10%? Sure, you might come out ahead on average, but a drop in the ...
D Stanley's user avatar
  • 130k
17 votes
Accepted

US, estimated taxes - but for first filing?

No. From 1040-ES: Exception. You do not have to pay estimated tax for 2017 if you were a U.S. citizen or resident alien for all of 2016 and you had no tax liability for the full 12-month 2016 ...
Magua's user avatar
  • 5,097
14 votes

Why are estimated taxes due "one month early" for the 2nd and 3rd quarters only?

Here's an answer copied from https://www.quora.com/Why-is-the-second-quarter-of-estimated-quarterly-taxes-only-two-months Estimated taxes used to be paid based on a calendar quarter, but in the 60's ...
John Gilmer's user avatar
14 votes
Accepted

One-time estimated tax payment for windfall

If your total tax withholding (from your paychecks; not including estimated taxes) reaches 90% of your tax liability for this year, or 100% (110% for high earners) of your tax liability for last year, ...
user102008's user avatar
  • 16.9k
9 votes

Why doesn't ADP accurately withhold state and federal income tax (even if W4 is correct)?

ADP does not know your full tax situation and while the standard exemption system (actually designed by the IRS not ADP) works fairly well for most people it is an approximation. This system is ...
rhaskett's user avatar
  • 6,588
9 votes
Accepted

Is there a penalty to withholding more taxes at the end of the year?

While that is an extreme example, it is permissible. The IRS considers all money withheld from paychecks as meeting the requirements for timeliness, as long as in the end you make the safe harbors. ...
mhoran_psprep's user avatar
8 votes
Accepted

Will I be penalized for not making an estimated payment in the first quarter for a side gig that started in the second quarter?

If you go with option #2 and you withhold enough extra to avoid an underpayment (safe harbors are summarized here), you won't be penalized. This is by far the simpler option as long as your side gig ...
Craig W's user avatar
  • 15.7k
8 votes
Accepted

Need help understanding Estimated Tax payments and safe harbor rules

Update: I see what you're saying. You're saying that the tax based on annualized income in the first two quarters was more than $0 but less than $1000, but you you didn't pay 90% of the appropriate ...
user102008's user avatar
  • 16.9k
6 votes

Why pay estimated taxes?

Your logic is not wrong. But the risk is more significant than you seem to assume. Essentially you are proposing taking a 2.6% loan to buy stocks. Is that a good strategy? On average, probably. ...
Mark Perryman's user avatar
6 votes

Am I allowed to make estimated tax payment after deadline

In theory, you should count it for 2017, if you could not have received the money prior to 1/1/17. See the IRS's page on constructive receipt for more details. However, I'd be concerned about the ...
Joe's user avatar
  • 35.7k
6 votes

How to calculate my estimated taxes. 1099 MISC + Self Employment

There is a shortcut you can use when calculating federal estimated taxes. Some states may allow the same type of estimation, but I know at least one (my own--Illinois) that does not. The shortcut: ...
Phil Sandler's user avatar
  • 3,501
6 votes

US, estimated taxes - but for first filing?

In fact - - do you pay the small penalty for not having paid estimated taxes as you go along? No, an exception to the penalty for underpayment of estimated taxes is made when no tax liability existed ...
Hart CO's user avatar
  • 69.1k
6 votes
Accepted

If my withholding will pay my and my spouse's tax bill, does she still need to pay estimated taxes as an independent contractor?

If you are filing joint then the important thing is to have enough withheld by the combination of both spouses withholding and estimated payments. It doesn't matter how the payments are divided ...
mhoran_psprep's user avatar
6 votes

Estimated State payment too big --> money back; + 2018 Tax Reform

You need to allocate the $30,000 recovery between payments made in 2017 and payments in 2018. For example, if you paid (and deducted as an itemized deduction) $30,000 in 2017, then the $30,000 ...
prl's user avatar
  • 2,804
6 votes

I guesstimated my taxes and overpaid a bit before April 15. But I have not filed. Where can I file and not pay?

On your 1040 line 26, you can report all past payments made for the year. https://www.irs.gov/faqs/estimated-tax/individuals#:~:text=Report%20all%20your%20estimated%20tax,your%20prior%20year%20tax%...
Grade 'Eh' Bacon's user avatar
6 votes

How to estimate "estimated" taxes?

The keyword is "estimated". You're estimating. It's not a precise number, it's not your actual tax liability. As was mentioned in the other answers, there are safe harbors that allow you to ...
littleadv's user avatar
  • 166k
5 votes
Accepted

Wife started working on 3Q - how many exemptions can we claim?

I think you are confused about a few things. (Either that, or I am confused by your question. :) Let's try to clear up the confusion first. Form 1040-ES is used only if you are sending quarterly ...
Ben Miller's user avatar
  • 115k
5 votes
Accepted

When is the Quarter 1 Estimated Tax form Due in the US?

Emancipation Day falls on the 16th, but is being observed on the 15th this year. This is observed only in Washington, DC, therefore the IRS is closed on the 15th. This means the next business day is ...
jimmy0x52's user avatar
  • 372
5 votes

Going from a 1099 to W-2 job, must I pay estimated taxes?

For this year, you should not need to make estimated tax payments. Tax withheld from your paycheck (W-2) will be treated as having been paid evenly throughout the year. Your major liability would be ...
Istanari's user avatar
  • 2,131
5 votes

Estimated State payment too big --> money back; + 2018 Tax Reform

Was the $20K state tax payment made in 2017, or made in 2018 for your 2017 taxes? If the $20K payment was made in 2017, it could have been deducted on your 2017 federal return, along with any other ...
nanoman's user avatar
  • 29.4k
5 votes

One-time estimated tax payment for windfall

Can I just make a one-time, one-off payment Yes. Do I necessarily need to fill out a 1040-ES or can I make an educated guess at the tax That part I don't know. how would I go about reporting this ...
RonJohn's user avatar
  • 50.6k
5 votes
Accepted

Deciding if you need to make estimated tax payments

See the instructions for line 8 of Form 2210. This is where you determine the amount for the 100% of previous year's tax safe harbor. In part 1, you add up a bunch of different taxes. But in part 2, ...
Craig W's user avatar
  • 15.7k
5 votes

Can I pay a previous quarter's estimated taxes with current quarter?

The short answer is, paying missed estimated taxes from previous quarters won't avoid a penalty if there is one, but the sooner you pay, the smaller the penalty (which is the interest on the underpaid ...
user102008's user avatar
  • 16.9k
5 votes

Uneven Income and Estimated Taxes

The IRS accounts for this with Schedule AI - Annualized Income Installment Method which is part of Form 2210: If your income varied during the year because, for example, you operated your business on ...
Hart CO's user avatar
  • 69.1k
5 votes
Accepted

I switched from self-employed to FTE in May, do I need to continue to pay estimated tax?

You don't have to pay estimated taxes, but you might be penalized for under-withholding if you don't. However, as long as you meet the safe harbor withholding requirements, you're in the clear. The ...
Stan H's user avatar
  • 6,508
4 votes
Accepted

Are missed "estimated tax payment' penalties really enforced by IRS and FTB(CA)?

Should I be worried and take proactive action and try to fix this mess or just as well I could wait for statute of limitations to kick-in? No, you should not. If you filed your tax return ...
littleadv's user avatar
  • 166k
4 votes
Accepted

Withholding for unexpected Short-Term Capital Gains and Penalties

The safe harbor provision is based on the tax you or the prior year. So in 2016 this helped you as your tax was substantially increased from 2015. However, by the same token in 2017 your safe harbor ...
Eric Johnson's user avatar
  • 2,427
4 votes
Accepted

Do I have to pay estimated taxes?

Paying estimated taxes avoids an underpayment penalty, so to determine whether or not you need to pay estimated taxes, you need to look at what triggers the penalty. An IRS article on Estimated Taxes ...
Ben Miller's user avatar
  • 115k
4 votes

Would it be a good idea to start my LLC while I owe the IRS?

The IRS wants you to file taxes This has me spooked, because lots of people pretend to be the IRS so they can scam you. They tend to use telephone or online as the first method of contact (IRS uses ...
Harper - Reinstate Monica's user avatar

Only top scored, non community-wiki answers of a minimum length are eligible