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Author: letranger One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: not paying estimated taxes a good idea? Date: 5/12/1998 2:20 AM
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Okay, here's something I've been wondering about since April 15:

A significant portion of my taxable income is from dividends & capital gains, so I'm supposed to pay the IRS estimated tax every quarter; and, prior to 1997, I'd always done so, being the law-abiding citizen that I am.

Now, in 1997, for various reasons, I didn't pay any of my estimated taxes. I figured I'd pay dearly for this come April 15. Imagine my suprise when tax time came and I found that my penalty for underpayment was a walloping $65 or so (I forget the exact amount) -- in other words, just a tiny fraction of what I made by keeping the money I was supposed to be paying the IRS fully invested instead.

Did I just get lucky? Or does it in general make more sense not to pay estimated taxes, and just pay the penalty every April 15? I'm not sure if 1997 was really representative, since my investments did a lot better in '96 than they did in '97, so my actual tax for '97 was significantly less than my estimated tax.

Any suggestions or links to relevant info would be most appreciated.

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