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fleg, you said: Actually, no. I figured our 2008 payments based on our actual 2008 income. How do you do that? Do you actually calculate one of the Sched D Worksheets, and form 6251 (just in case you're subject to AMT), let alone the form 2201 AI and 1040?
And if your income comes entirely from investing and you reinvest all your LTCG you must live on Qualified Dividends and Social Security and Pensions. If it's Social Security you have to consider it is somewhat taxable (another form to compute). Do you annualize your Schedule A for Property and State Income tax, and mortgage interest, and possibly Medical or other Deductions? Do you shift any arbitrary income, such as RMD's to December and make arbitrary deductions in March to maximize the wonders of Annualization?

All of this reduces the tax free loans to Uncle Sam, along with the obvius one of getting your refund in CASH instead of letting them hold it to apply to your January 15th installment. You are on the right track annualizing actual quarterly income to figure your installments, but if you REALLY annulized you wouldn't have gotten a refund.

If you get RMDs look into having them Distributed after Septemter and withhold enough to cover your installments, so you don't have to worry about them and REALLY not loan Uncle Sam any more than necessary.

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