Estimated Taxes, I waited!


H

Hrrglburf

So, I've started on my path of self-employment, and now the
deadline is closing for the first estimated tax payment.
Stupidly I did not save enough.

Roughly my quarterly tax payment should be about 881. But I
only have about $500. Am I screwed? Can I make up for the
difference on the next estimated tax payment?
 
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P

Paul Thomas, CPA

Hrrglburf said:
So, I've started on my path of self-employment, and now the
deadline is closing for the first estimated tax payment.
Stupidly I did not save enough.

Roughly my quarterly tax payment should be about 881. But I
only have about $500. Am I screwed? Can I make up for the
difference on the next estimated tax payment?
Live and learn. Yes, pay as much as you have, and make up
the difference as soon as possible (even making 5 payments
if necessary) to reduce any under-estimated penalty.
 
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B

Bill

(e-mail address removed) (Hrrglburf) posted:
So, I've started on my path of
self-employment, and now the deadline is
closing for the first estimated tax payment.
Stupidly I did not save enough.
Roughly my quarterly tax payment should be
about 881. But I only have about $500. Am I
screwed? Can I make up for the difference on
the next estimated tax payment?
You're not necessarily "screwed." Go ahead and make the
payment you can afford. Then, when the next "periodic"
payment is due (by June 15), try to pay it by June 1 and add
the difference you missed this month.

That will probably "catch you up" OK. (I've personally had
the embarrassing experience of beginning to prepare my Sep
15 payment, and discovering that "coupon #2 for June 15" is
still unsent. So I just sent them both off on September 1
.... and heard no complaint.)

Bill
 
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S

Seth Breidbart

Hrrglburf said:
So, I've started on my path of self-employment, and now the
deadline is closing for the first estimated tax payment.
Stupidly I did not save enough.

Roughly my quarterly tax payment should be about 881. But I
only have about $500. Am I screwed? Can I make up for the
difference on the next estimated tax payment?
Pay the $500 now. Make up the difference next quarter.

At the level of income you appear to have, I'd say the
chances are very low that there would be any penalty or
interest for your late payment.

If you also have employment income, you could increase your
withholding from that, because that withholding will be
assumed to occur evenly throughout the year.

Seth
 
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R

rick++

With he long method of computing penalty on 2210, the fine
is computed per diem. So as soon as you can pay matters.
The IRS will automatically compute the penalty using the
shorter method and have a possibly higher amount. You can
compute these penalty forms yourself to see how to avoid it
or minimize it. Be forewarned, these are long, nasty
forms.

Another motivation for 2210 and 2210AI is that they provide
two methods of estimating taxes and one may be result in
delayed tax payments. The rule of thumb is that if more of
your income in the first half of the year, use the (short)
equal installment method. If more is in the second half of
the year or highly variable, use the (long and nasty)
annualized method.
 
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T

TaxmanHog

Hrrglburf said:
So, I've started on my path of self-employment, and now the
deadline is closing for the first estimated tax payment.
Stupidly I did not save enough.

Roughly my quarterly tax payment should be about 881. But I
only have about $500. Am I screwed? Can I make up for the
difference on the next estimated tax payment?
Yes, that should accrue a minor ES penalty which will be
determined on 4/15/2007 Catch up on the 6/15 deposit
 
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E

ed

Send in what you can and follow with the remainder. The
penalty, if the amuonts are correct, is simple interest of
7% for the time the underpayment was overdue.

Does your $881 estimate include SE taxes? Did you deduct
expenses from your Schedule C income? Did you pay more, or
less than $3,500 for 2004 taxes? If less, divide 2004 taxes
by 4 and that's all you have to pay each quarter this year
without a penalty. The rest will be due April 07.

ed
 
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M

Missy

Hrrglburf said:
So, I've started on my path of self-employment, and now the
deadline is closing for the first estimated tax payment.
Stupidly I did not save enough.

Roughly my quarterly tax payment should be about 881. But I
only have about $500. Am I screwed? Can I make up for the
difference on the next estimated tax payment?
This is what I advise my clients. There may be a little
penalty next year but it should not amount to too much.

Missy Doyle
 
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