Estimated Federal Income Tax Payment

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blueman457
Posts: 411
Joined: Sun Jul 26, 2015 12:19 pm

Estimated Federal Income Tax Payment

Post by blueman457 » Mon Sep 24, 2018 11:21 pm

Q: How do I make an estimated federal income tax payment? Just use https://www.irs.gov/payments ? And then when I file my 2018 federal income, I just put $10,000 down for line 65 for "2018 Estimated Tax Payments"?


All,

I started to calculate how much I may have to owe come tax filing time for 2018 (using various calculators found on bogleheads). We are plain W-2 employees but our income jumped up significantly this year and I'm not sure if we withheld enough. I do not think we qualify for the safe harbor, as I don't think we would have made 110% of 2017's total federal tax; and we might just shy of 90% of this year's tax.

Do I just go to irs.gov/payments and make an estimated payment? (ex: $10,000)? And then when I file my 2018 federal income, I just put $10,000 down for line 65 for "2018 Estimated Tax Payments"?

Thanks,

Blue Man

rainyday1
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Location: London

Re: Estimated Federal Income Tax Payment

Post by rainyday1 » Tue Sep 25, 2018 4:12 am

Our previous CPA advised us to mail the estimates instead of paying online. Just print out the estimated tax payment vouchers, fill it out and include your check. Send it certified mail to the appropriate address for your state.

That part is easy... understanding what you actually owe, I found that to be the extremely frustrating part. :annoyed

cas
Posts: 379
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Re: Estimated Federal Income Tax Payment

Post by cas » Tue Sep 25, 2018 6:38 am

blueman457 wrote:
Mon Sep 24, 2018 11:21 pm
Q: How do I make an estimated federal income tax payment? Just use https://www.irs.gov/payments ? And then when I file my 2018 federal income, I just put $10,000 down for line 65 for "2018 Estimated Tax Payments"?
If you would just now be making the estimated tax payment, Line 79 (on the 2017 version of the 1040) "Estimated Tax Penalty (see instructions)" would also be involved. (And it really is very much a "see instructions" kind of line.) Form 2210 and optionally Schedule AI get pulled into the picture, unless you have the IRS figure the penalty for you.

The issue with meeting safe harbor using estimated tax payments is that the IRS requires you to divide the estimated payments equally across the 4 quarterly estimated tax payment dates. (Unless you file Schedule AI, which many people despise so much they would rather pay the penalty, but which might reduce your penalty if your income was loaded towards later in the year.) Absent Schedule AI, if you pay now, you would still be some number of days late for each of the first 3 quarterly estimated tax payment dates. (Although, if you pay now, you would be less late on the dates than if you waited until you filed your taxes next year.) If you use a tax program like TurboTax, it will ask you how much estimated tax you had paid by each of the quarterly due dates and do Form 2210 in the background.

If it would be possible to withhold enough from remaining paychecks to meet safe harbor, that would get around the problem. The IRS considers withholding to have been made equally throughout the year, no matter when the withholding was actually done.

If you enter "estimated tax" or "Form 2210" or "Schedule AI" in the search box at the top of this page, I'm sure there is plenty of forum discussiion on these issues.

MikeG62
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Re: Estimated Federal Income Tax Payment

Post by MikeG62 » Tue Sep 25, 2018 6:54 am

cas wrote:
Tue Sep 25, 2018 6:38 am

...If it would be possible to withhold enough from remaining paychecks to meet safe harbor, that would get around the problem. The IRS considers withholding to have been made equally throughout the year, no matter when the withholding was actually done.
^This is what I would do.

You can select an additional dollar amount to be withheld from each paycheck on your W4 (does not have to be accomplished solely by lowering your withholding exemptions). With 3 months remaining, that would be $3,333 per month. Supplement the lower take home pay by using the $10,000 you would have otherwise sent in with the estimated payment.

Also, did you check your state income taxes to ensure you don't have a shortfall there too?
Real Knowledge Comes Only From Experience

blueman457
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Re: Estimated Federal Income Tax Payment

Post by blueman457 » Tue Sep 25, 2018 9:10 am

MikeG62 wrote:
Tue Sep 25, 2018 6:54 am
cas wrote:
Tue Sep 25, 2018 6:38 am

...If it would be possible to withhold enough from remaining paychecks to meet safe harbor, that would get around the problem. The IRS considers withholding to have been made equally throughout the year, no matter when the withholding was actually done.
^This is what I would do.

You can select an additional dollar amount to be withheld from each paycheck on your W4 (does not have to be accomplished solely by lowering your withholding exemptions). With 3 months remaining, that would be $3,333 per month. Supplement the lower take home pay by using the $10,000 you would have otherwise sent in with the estimated payment.

Also, did you check your state income taxes to ensure you don't have a shortfall there too?
Thanks. I'll be able to withhold enough for the remaining of the year if I make the change now. My state is a flat income tax (based off of federal taxable income), so I think I should be ok?

Blue Man

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FiveK
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Re: Estimated Federal Income Tax Payment

Post by FiveK » Tue Sep 25, 2018 10:28 am

blueman457 wrote:
Tue Sep 25, 2018 9:10 am
My state is a flat income tax (based off of federal taxable income), so I think I should be ok?
Depends on how much non-W2 income. A quick state tax estimate may allow you to change the question mark to a period.

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FiveK
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Re: Estimated Federal Income Tax Payment

Post by FiveK » Tue Sep 25, 2018 10:46 am

rainyday1 wrote:
Tue Sep 25, 2018 4:12 am
Our previous CPA advised us to mail the estimates instead of paying online. Just print out the estimated tax payment vouchers, fill it out and include your check. Send it certified mail to the appropriate address for your state.

That part is easy... understanding what you actually owe, I found that to be the extremely frustrating part. :annoyed
As other posters have noted, withholding is better if the income occurred earlier in the year, and perhaps less work in any case.

If one wishes to make irregular estimated payments, https://www.eftps.gov/eftps/ works well. It takes a little effort to establish an account, but once that is done the process is simpler than using certified mail.

For estimating 2018 taxes, the "what if?" worksheets of TurboTax, TaxAct, etc. may be the most accurate if one has an extremely complex situation.

If one has merely a "somewhat complex" situation, various web-based and spreadsheet programs are available. To date, the personal finance toolbox spreadsheet has been the most accurate (i.e., using 2018 instead of 2017 tables, including more credits, phaseouts, etc.).

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eye.surgeon
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Re: Estimated Federal Income Tax Payment

Post by eye.surgeon » Tue Sep 25, 2018 10:50 am

rainyday1 wrote:
Tue Sep 25, 2018 4:12 am
Our previous CPA advised us to mail the estimates instead of paying online. Just print out the estimated tax payment vouchers, fill it out and include your check. Send it certified mail to the appropriate address for your state.
I think your previous CPA needs to join the 21st century. I've been paying online at https://www.irs.gov/payments/direct-pay for years.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett

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