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Paying Estimated Taxes
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Hank Youngerman
May 8, 2012, 12:08:18 PM5/8/12
to
I do not usually pay estimated taxes; I withhold enough from my day job to cover my investment income and small side business. However I got an extra job that was large enough that I want to pay several thousand in estimated taxes.
1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
Thanks.
--
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<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
Thanks.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
JoeTaxpayer
May 8, 2012, 1:56:04 PM5/8/12
to
On 5/8/12 12:08 PM, Hank Youngerman wrote:
> I do not usually pay estimated taxes; I withhold enough from my day job to cover my investment income and small side business. However I got an extra job that was large enough that I want to pay several thousand in estimated taxes.
>
> 1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
> 2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
>
> Thanks.
The credit card aside, I have a brilliant suggestion, if I do say so....
> I do not usually pay estimated taxes; I withhold enough from my day job to cover my investment income and small side business. However I got an extra job that was large enough that I want to pay several thousand in estimated taxes.
>
> 1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
> 2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
>
> Thanks.
Why not submit a W4 at day job, with $X extra withheld each check? If
your goal, or part of it, was to avoid the estimated tax form
submitting, this would do it for you. As December draws near, another
W4. For what it's worth, my W4 is done on line, so no paper and easy to
sign in to change prior to next check.
Hank Youngerman
May 8, 2012, 5:05:49 PM5/8/12
to
On Tuesday, May 8, 2012 12:08:18 PM UTC-4, Hank Youngerman wrote:
> I do not usually pay estimated taxes; I withhold enough from my day job to cover my investment income and small side business. However I got an extra job that was large enough that I want to pay several thousand in estimated taxes.
>
> 1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
> 2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
>
> Thanks.
I think my post stated that I usually have enough withheld to cover my taxes, but that this year was unique in that I had some extra income.
> I do not usually pay estimated taxes; I withhold enough from my day job to cover my investment income and small side business. However I got an extra job that was large enough that I want to pay several thousand in estimated taxes.
>
> 1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
> 2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
>
> Thanks.
I also need to spend a certain amount on a credit card to get a points bonus, and the amount of taxes I would pay would be enough to put me over the top.
JoeTaxpayer
May 8, 2012, 5:18:50 PM5/8/12
to
On 5/8/12 5:05 PM, Hank Youngerman wrote:
> I think my post stated that I usually have enough withheld to cover my taxes, but that this year was unique in that I had some extra income.
>
> I also need to spend a certain amount on a credit card to get a points bonus, and the amount of taxes I would pay would be enough to put me over the top.
For most "estimated tax" needs, the issue is that there is no regular
> I think my post stated that I usually have enough withheld to cover my taxes, but that this year was unique in that I had some extra income.
>
> I also need to spend a certain amount on a credit card to get a points bonus, and the amount of taxes I would pay would be enough to put me over the top.
job to use payroll to do the withholding. Absent the Credit Card issue,
I thought that a good idea.
Drug chains sell a Visa 'Gift' card, with a $4.95 fee on $500 card
purchase. This 1% is usually far lower than the fee the tax payment
services charge. But that makes this "not a tax question."
My card gives me 2%, and I recall thinking to use the card in April, but
the fee was even higher than that.
dvsarwate
May 8, 2012, 10:44:16 PM5/8/12
to
On May 8, 11:08 am, Hank Youngerman <dontspa...@redtopbg.com> wrote:
<<snip>>
credit card or debit card via telephone or Internet, and the e-pay
section
of Publication 505 provides links to four approved companies who
handle
the payments by phone or Internet.
One thing to keep in mind is that paying sufficient tax during the
year
is not enough to avoid penalties for non-payment in TIMELY fashion,
meaning that tax withheld plus four equal timely payments of estimated
tax together must equal at least the safe harbor amounts. So, if you
have missed the first quarterly payment, you should take penalties and
interest into account also. The advantage of having extra withheld
from
the wages of a regular job (as JoeTaxpayer has suggested but you have
rejected) is that withholding can be treated as having paid in four
equal
timely installments regardless of when it actually occurred. So, extra
withholding in the last few months of the year (e,g. after the mutual
funds post their estimated year-end distributions) can be used to
avoid
making estimated tax payments.
Dilip Sarwate
<<snip>>
> 2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
IRS Publication 505 says that you can make estimated tax payments by
credit card or debit card via telephone or Internet, and the e-pay
section
of Publication 505 provides links to four approved companies who
handle
the payments by phone or Internet.
One thing to keep in mind is that paying sufficient tax during the
year
is not enough to avoid penalties for non-payment in TIMELY fashion,
meaning that tax withheld plus four equal timely payments of estimated
tax together must equal at least the safe harbor amounts. So, if you
have missed the first quarterly payment, you should take penalties and
interest into account also. The advantage of having extra withheld
from
the wages of a regular job (as JoeTaxpayer has suggested but you have
rejected) is that withholding can be treated as having paid in four
equal
timely installments regardless of when it actually occurred. So, extra
withholding in the last few months of the year (e,g. after the mutual
funds post their estimated year-end distributions) can be used to
avoid
making estimated tax payments.
Dilip Sarwate
Mark Bole
May 9, 2012, 9:58:44 AM5/9/12
to
On 2012/05/08 14:05, Hank Youngerman wrote:
> On Tuesday, May 8, 2012 12:08:18 PM UTC-4, Hank Youngerman wrote:
>> I do not usually pay estimated taxes; I withhold enough from my day job to cover my investment income and small side business. However I got an extra job that was large enough that I want to pay several thousand in estimated taxes.
>>
>> 1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
>> 2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
>>
>> Thanks.
>
> I think my post stated that I usually have enough withheld to cover my taxes, but that this year was unique in that I had some extra income.
>
> I also need to spend a certain amount on a credit card to get a points bonus, and the amount of taxes I would pay would be enough to put me over the top.
>
I have been under the impression that paying taxes with credit card is
> On Tuesday, May 8, 2012 12:08:18 PM UTC-4, Hank Youngerman wrote:
>> I do not usually pay estimated taxes; I withhold enough from my day job to cover my investment income and small side business. However I got an extra job that was large enough that I want to pay several thousand in estimated taxes.
>>
>> 1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
>> 2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
>>
>> Thanks.
>
> I think my post stated that I usually have enough withheld to cover my taxes, but that this year was unique in that I had some extra income.
>
> I also need to spend a certain amount on a credit card to get a points bonus, and the amount of taxes I would pay would be enough to put me over the top.
>
considered a "cash advance", not a purchase (which is why you have to
pay the credit card merchant fee, not the IRS). Wouldn't that affect
eligibility for bonus points?
I wouldn't advise your Option 1. In addition to SSN, they need a tax
year for the payment. It might just get sent back to you.
--
Mark Bole
EA in CA
makbo at pacbell dot net
JoeTaxpayer
May 9, 2012, 10:36:31 AM5/9/12
to
On 5/9/12 9:58 AM, Mark Bole wrote:
> I have been under the impression that paying taxes with credit card is
> considered a "cash advance", not a purchase (which is why you have to
> pay the credit card merchant fee, not the IRS). Wouldn't that affect
> eligibility for bonus points?
>
> I wouldn't advise your Option 1. In addition to SSN, they need a tax
> year for the payment. It might just get sent back to you.
It's a charge. http://www.irs.gov/efile/article/0,,id=101316,00.html
> I have been under the impression that paying taxes with credit card is
> considered a "cash advance", not a purchase (which is why you have to
> pay the credit card merchant fee, not the IRS). Wouldn't that affect
> eligibility for bonus points?
>
> I wouldn't advise your Option 1. In addition to SSN, they need a tax
> year for the payment. It might just get sent back to you.
shows the fees ranging from 1.89% to 2.35%.
FWIW - I have a card that returns 2%, and might have used it except I
hit my annual cap, $1500 rebate per year. The card anniversary happens
to be 4/15, so once I hit that wall, it's back to using cards whose
return is less.
Hank - the link I offered shows you can use this method for quarterly
payments. Two per quarter, actually.
Confused
May 9, 2012, 11:36:15 AM5/9/12
to
>
> One thing to keep in mind is that paying sufficient tax during the
> year
> is not enough to avoid penalties for non-payment in TIMELY fashion,
> meaning that tax withheld plus four equal timely payments of estimated
> tax together must equal at least the safe harbor amounts. So, if you
> have missed the first quarterly payment, you should take penalties and
> interest into account also.
Yet I had a $12 penalty!
I got an extension, so I my first quarterly payment was a few weeks late. I suppose there is no remedy for that except paying the penalty?
dpb
May 9, 2012, 11:36:42 AM5/9/12
to
On 5/8/2012 9:44 PM, dvsarwate wrote:
...
But if the income isn't distributed throughout the year, isn't it still
safe to only pay sufficient estimated in the quarter following the
actual income receipt?
--
...
> One thing to keep in mind is that paying sufficient tax during the
> year
> is not enough to avoid penalties for non-payment in TIMELY fashion,
> meaning that tax withheld plus four equal timely payments of estimated
> tax together must equal at least the safe harbor amounts. So, if you
> have missed the first quarterly payment, you should take penalties and
> interest into account also....
> year
> is not enough to avoid penalties for non-payment in TIMELY fashion,
> meaning that tax withheld plus four equal timely payments of estimated
> tax together must equal at least the safe harbor amounts. So, if you
> have missed the first quarterly payment, you should take penalties and
But if the income isn't distributed throughout the year, isn't it still
safe to only pay sufficient estimated in the quarter following the
actual income receipt?
--
Rich Carreiro
May 9, 2012, 11:53:44 AM5/9/12
to
Confused <*@lippman.info> writes:
>>
>> One thing to keep in mind is that paying sufficient tax during the
>> year
>> is not enough to avoid penalties for non-payment in TIMELY fashion,
>> meaning that tax withheld plus four equal timely payments of estimated
>> tax together must equal at least the safe harbor amounts. So, if you
>> have missed the first quarterly payment, you should take penalties and
>> interest into account also.
>
> Last year I paid $10,000 in estimated tax and got a $5,000 refund.
> Yet I had a $12 penalty!
> I got an extension, so I my first quarterly payment was a few weeks late. I suppose there is no remedy for that except paying the penalty?
You can't cure an underpayment by a later overpayment.
>>
>> One thing to keep in mind is that paying sufficient tax during the
>> year
>> is not enough to avoid penalties for non-payment in TIMELY fashion,
>> meaning that tax withheld plus four equal timely payments of estimated
>> tax together must equal at least the safe harbor amounts. So, if you
>> have missed the first quarterly payment, you should take penalties and
>> interest into account also.
>
> Last year I paid $10,000 in estimated tax and got a $5,000 refund.
> Yet I had a $12 penalty!
> I got an extension, so I my first quarterly payment was a few weeks late. I suppose there is no remedy for that except paying the penalty?
To take an extreme example, say you make no payments or
withholding for 11.5 months, and then you pay $20,000 on
December 15th and end up with income tax of $15,000 and
get a $5,000 refund.
You're still going to owe a penalty for being underpaid for
almost all of the year, even though you got a refund.
--
Rich Carreiro rlc-...@rlcarr.com
Arthur Kamlet
May 9, 2012, 4:12:47 PM5/9/12
to
In article <14856184.143.1336532792385.JavaMail.geo-discussion-forums@ynjn15>,
Did the IRS send you a notice asking for the penalty?
Did your software calculate this penalty?
Other?
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
Confused <*@lippman.info> wrote:
>
>>
>> One thing to keep in mind is that paying sufficient tax during the
>> year
>> is not enough to avoid penalties for non-payment in TIMELY fashion,
>> meaning that tax withheld plus four equal timely payments of estimated
>> tax together must equal at least the safe harbor amounts. So, if you
>> have missed the first quarterly payment, you should take penalties and
>> interest into account also.
>
>Last year I paid $10,000 in estimated tax and got a $5,000 refund.
>Yet I had a $12 penalty!
>I got an extension, so I my first quarterly payment was a few weeks
>late. I suppose there is no remedy for that except paying the penalty?
How did you discover you had a $12 penalty?
>
>>
>> One thing to keep in mind is that paying sufficient tax during the
>> year
>> is not enough to avoid penalties for non-payment in TIMELY fashion,
>> meaning that tax withheld plus four equal timely payments of estimated
>> tax together must equal at least the safe harbor amounts. So, if you
>> have missed the first quarterly payment, you should take penalties and
>> interest into account also.
>
>Last year I paid $10,000 in estimated tax and got a $5,000 refund.
>Yet I had a $12 penalty!
>I got an extension, so I my first quarterly payment was a few weeks
>late. I suppose there is no remedy for that except paying the penalty?
Did the IRS send you a notice asking for the penalty?
Did your software calculate this penalty?
Other?
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
ira smilovitz
May 9, 2012, 4:59:19 PM5/9/12
to
On Wednesday, May 9, 2012 11:36:15 AM UTC-4, Confused wrote:
> >
> > One thing to keep in mind is that paying sufficient tax during the
> > year
> > is not enough to avoid penalties for non-payment in TIMELY fashion,
> > meaning that tax withheld plus four equal timely payments of estimated
> > tax together must equal at least the safe harbor amounts. So, if you
> > have missed the first quarterly payment, you should take penalties and
> > interest into account also.
>
> Last year I paid $10,000 in estimated tax and got a $5,000 refund.
> Yet I had a $12 penalty!
> I got an extension, so I my first quarterly payment was a few weeks late. I suppose there is no remedy for that except paying the penalty?
The "remedy" for that is to have part of your refund applied directly to your estimated taxes when you file your return. The applied amount is credited to your subsequent year tax account as of 4/15 if the funds were on deposit for the prior year by that date.
> >
> > One thing to keep in mind is that paying sufficient tax during the
> > year
> > is not enough to avoid penalties for non-payment in TIMELY fashion,
> > meaning that tax withheld plus four equal timely payments of estimated
> > tax together must equal at least the safe harbor amounts. So, if you
> > have missed the first quarterly payment, you should take penalties and
> > interest into account also.
>
> Last year I paid $10,000 in estimated tax and got a $5,000 refund.
> Yet I had a $12 penalty!
> I got an extension, so I my first quarterly payment was a few weeks late. I suppose there is no remedy for that except paying the penalty?
Ira Smilovitz
removeps-groups
May 10, 2012, 1:10:19 AM5/10/12
to
"Hank Youngerman" <donts...@redtopbg.com> wrote in message
news:30230615.52.1336489715228.JavaMail.geo-discussion-forums@yndq16...
>I do not usually pay estimated taxes; I withhold enough from my day job to
>cover my investment income and small side business.
> However I got an extra job that was large enough that I want to pay
> several thousand in estimated taxes.
The W-4 has a worksheet to help you calculate the number of exemptions to
claim, and the worksheet considers your other income (such as income from
first job, dividends). As an example, if you have a job that pays $10000 a
year and no other income, the number of exemptions to claim is probably 2 or
more, but if you have dividend income of $500,000 then the number of
exemptions to claim is probably 0, and withhold an extra dollar amount.
Anyway, no one mentioned, but it's a good investment to set up an account at
eftps.com. It takes two weeks to set one up as they mail you a PIN number
and such in the mail. If you live in CA, then there search for "California
webpay" and set up an account there. You can pay estimated taxes,
penalties, gift taxes, etc.
news:30230615.52.1336489715228.JavaMail.geo-discussion-forums@yndq16...
>I do not usually pay estimated taxes; I withhold enough from my day job to
>cover my investment income and small side business.
> However I got an extra job that was large enough that I want to pay
> several thousand in estimated taxes.
claim, and the worksheet considers your other income (such as income from
first job, dividends). As an example, if you have a job that pays $10000 a
year and no other income, the number of exemptions to claim is probably 2 or
more, but if you have dividend income of $500,000 then the number of
exemptions to claim is probably 0, and withhold an extra dollar amount.
Anyway, no one mentioned, but it's a good investment to set up an account at
eftps.com. It takes two weeks to set one up as they mail you a PIN number
and such in the mail. If you live in CA, then there search for "California
webpay" and set up an account there. You can pay estimated taxes,
penalties, gift taxes, etc.
Gary Goodman
May 10, 2012, 5:52:06 PM5/10/12
to
On May 8, 12:08 pm, Hank Youngerman <dontspa...@redtopbg.com> wrote:
> I do not usually pay estimated taxes; I withhold enough from my day job to cover my investment income and small side business. However I got an extra job that was large enough that I want to pay several thousand in estimated taxes.
>
> 1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
> 2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
>
> Thanks.
>
> --
Nobody addressed your first question completely. The answer is no. A
> I do not usually pay estimated taxes; I withhold enough from my day job to cover my investment income and small side business. However I got an extra job that was large enough that I want to pay several thousand in estimated taxes.
>
> 1) I don't really want to fill out forms and mail a check if I can help it. Can I just send the IRS a check from my automated bill pay, listing my SSN as the "Account number," and assume they will be able to match it up at year-end when I claim that I paid $x thousand in estimated tax?
> 2) I would like if possible to pay with a credit card. (I've already determined that the convenience fee is worthwhile.) However, I saw somewhere that you cannot pay estimated taxes this way, only taxes due with your return. Is this true?
>
> Thanks.
>
> --
couple of the banks I use specifically mention that you shouldn't use
the billpaying service to pay your federal or state income taxes.
I've seen payments applied incorrectly even though the checks were
sent with the vouchers so I bet if you don't have the voucher with the
check, the odds of the payment getting misapplied would increase a
lot.
Gary
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