Estimated Tax: Interpreting 2017 Publication 505

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MotoTrojan
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Estimated Tax: Interpreting 2017 Publication 505

Post by MotoTrojan »

https://www.irs.gov/pub/irs-pdf/p505.pdf

Trying to make sure I am properly interpreting this... I will have some substantial capital-gains this year, which I believe would qualify me for estimated tax payments.

I believe I can get out of this by having more withheld this year (2017) than in 2016. Where I need some help is understanding exactly which taxes are included in my Total Federal & State Taxes.

1: Are Social Security and Medicare taxes part of Form 1040 Line 63, Total Tax? It is my understanding that this is the number I need to get my withholdings for 2017 above. With just "Federal Income Tax" I will come short currently, but with Social Security withholding I will clear this with margin.

2: Is CA SDI (State Disability Insurance) tax included as part of my CA State Form 540 Line 64, Total Tax? With this included, it appears I will clear my 2016 return. Without it (only CA State Income Tax) I will fall short, and need to increase my withholding amount.

Anything I am missing? Thinking I may want to increase my withholding for the rest of 2017 anyways to be safe, but if I am in the clear, that isn't worth bugging my employer.

Thanks in advance.
Katietsu
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by Katietsu »

No, normal social security earnings are not included. You should increase your federal income tax withholding. I am not familiar with CA. I would guess it would work the same you and would increase my state withholding as well.
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MotoTrojan
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by MotoTrojan »

Katietsu wrote:No, normal social security earnings are not included. You should increase your federal income tax withholding. I am not familiar with CA. I would guess it would work the same you and would increase my state withholding as well.
Thank you. Where are Social Security and Medicare located? Didn't see mention of them (other than excess SS) on my 1040.
kaneohe
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by kaneohe »

Line 63 is INCOME tax as calculated in the 1040 w/ adjustments for credits and other taxes. Normal Medicare and SS taxes are not in the equation
for your payments.........just withholding and estimated taxes. CASDI is similar in that respect to Medicare/SS taxes......you pay (withhold) them
but they are credited against your income tax due.
Last edited by kaneohe on Fri Aug 11, 2017 7:33 pm, edited 2 times in total.
kaneohe
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by kaneohe »

MotoTrojan wrote:https://www.irs.gov/pub/irs-pdf/p505.pdf

Trying to make sure I am properly interpreting this... I will have some substantial capital-gains this year, which I believe would qualify me for estimated tax payments.

I believe I can get out of this by having more withheld this year (2017) than in 2016. Where I need some help is understanding exactly which taxes are included in my Total Federal & State Taxes.

............................................................................
You need to have more withheld in 2017 than your line 63 tax in 2016. You are not comparing withholding in 2017 vs withholding in 2016.....
you probably knew that but your OP doesn't accurately reflect that.
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Duckie
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by Duckie »

MotoTrojan wrote:Are Social Security and Medicare taxes part of Form 1040 Line 63, Total Tax?
No.
Is CA SDI (State Disability Insurance) tax included as part of my CA State Form 540 Line 64, Total Tax?
No.

You will need to increase your federal and state income tax withholding on a federal W-4 form and a CA state form. Get them from your payroll and add an additional amount to lines 6 and 2 respectively. It's a minor pain, but less of a pain than filing 1040-ES. (And don't forget to re-fix it next year.)
Where are Social Security and Medicare located? Didn't see mention of them (other than excess SS) on my 1040.
They're not on the 1040 form. (Unless you're self employed, then they're on Schedule SE.) They're on your W-2 form.
Good Listener
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by Good Listener »

The Obamacare social security and Medicare taxes ARE part of the total if you are subject to them.
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MotoTrojan
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by MotoTrojan »

Thank you all! My payroll has an easy place online to update so should be painless.
kaneohe
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by kaneohe »

Good Listener wrote:The Obamacare social security and Medicare taxes ARE part of the total if you are subject to them.
They are part of line 63 coming from the OTHER TAXES section but I got the impression that OP was looking for Medicare/SS withholding to
be used along w/ normal income tax withholding as "credits/payments " for OP so they're on opposite sides of the equation.
Good Listener
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by Good Listener »

kaneohe wrote: Fri Aug 11, 2017 7:51 pm
Good Listener wrote:The Obamacare social security and Medicare taxes ARE part of the total if you are subject to them.
They are part of line 63 coming from the OTHER TAXES section but I got the impression that OP was looking for Medicare/SS withholding to
be used along w/ normal income tax withholding as "credits/payments " for OP so they're on opposite sides of the equation.
Right. I was just pointing that out because I got caught with it a few years ago for the 1st time.
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MotoTrojan
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Re: Estimated Tax: Interpreting 2017 Publication 505

Post by MotoTrojan »

kaneohe wrote: Fri Aug 11, 2017 7:51 pm
Good Listener wrote:The Obamacare social security and Medicare taxes ARE part of the total if you are subject to them.
They are part of line 63 coming from the OTHER TAXES section but I got the impression that OP was looking for Medicare/SS withholding to
be used along w/ normal income tax withholding as "credits/payments " for OP so they're on opposite sides of the equation.
Thought right. Sounds like I am all taken care of, appreciate everyones help and now just to nab that windfall and increase my withholdings. :sharebeer
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