Comments on: Estimated Taxes – Who, When, and How Much

By: Ryan

Ryan — Wed, 16 Sep 2009 03:40:40 +0000

Robert, I did something similar last year by withholding extra from my day job instead of paying estimated taxes for my small business income. It worked out well enough, but this year I planned a little better for my situation.

You can do a free electronic transfer to avoid fees, but if you insist on paying with your credit card, then you are probably out of luck in avoiding fees.

By: RobertSeattle

RobertSeattle — Tue, 15 Sep 2009 20:44:38 +0000

If you are paid a salary and find yourself behind on estimated taxes, and can afford it, just have lots more taken out of salary late in the year. The way the IRS calculates penalties, it “doesnt’ care” when salary based federal tax withholding occurs so it is a nice way to catch-up if you missed 1040-es payments.

I wish there was a way to pay 1040-ES taxes without the total rip-off 2.49% charged by the tax payment companies. Why can’t the IRS accept credit cards and get rid of the highway robbery middle man?

By: Kirk Kinder

Kirk Kinder — Wed, 02 Sep 2009 19:21:21 +0000

@Dan: I wouldn’t worry too much about that. So long as the government gets their money they seem to be happy. I have even missed an estimated payment and made it up later in the year. Never heard a word. I know other self-employed folks who do this regularly. Again, it is better to do them quarterly, but I think the IRS just wants to make sure they get their bounty so they don’t spend a lot of time chasing after folks who are a little late on paying.

This may change as the government needs more and more revenue, but I haven’t heard of them coming after self-employed folks. Now, if you have employees, you best be on time, especially with Social Security taxes or you will get a knock at the door.

By: Ryan

Ryan — Wed, 02 Sep 2009 15:06:59 +0000

Dan, if you have salaried income, then the tax withholdings from your employer are considered to have been made in equal payments regardless of when the money was actually withheld. So if you think you may be required to pay estimated taxes, you can change your W-4 to have more money withheld from your paycheck and avoid paying estimated taxes. I had additional income withheld from my day job last year for that purpose.

As for making late estimated taxes, I’m not sure. It depends if you will fall under the safe habor rules or not. If you can increase your withholdings from your day job, then you can avoid needing to make estimated tax payments.

By: Ryan Thompson

Ryan Thompson — Wed, 02 Sep 2009 14:58:34 +0000

Ryan-

As a long time estimated taxpayer, like a lot of people I was annoyed and frustrated at the payment options: vouchers and stamps or EFTPS. I always wondered why there wasn’t an easier way? So I started a service called Easy Estimated Taxes that allows people to manage and pay their estimated taxes online. Our goal is to make the entire estimated taxes process easy. I hope you’ll consider this as another payment option.

By: Dan

Dan — Wed, 02 Sep 2009 14:44:48 +0000

Question: Based on my calculations, I’m right on the border for needing to pay estimated taxes. However, my first two payments were past the April and June deadlines. Come April of 2010, if it turns out that I never really needed to send estimated payments, would I still get penalized for sending in those 2 payments late?

By: Ryan

Ryan — Wed, 02 Sep 2009 14:18:31 +0000

Sept 15th is the next payment deadline, so you can always get started on that date. But you will probably be OK as long as you meet the Safe Harbor requirements.

The impending deadline is why I wrote about this topic… I realized I’ve been sending in payments, but had never written about it!

By: Matt Jabs

Matt Jabs — Wed, 02 Sep 2009 14:14:52 +0000

Timely post for me Ryan. Now that I am earning more and more money from my blog each month… this is a practice I need to integrate into my financial life. This post definitely helps me decide how to best proceed.