Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: CarlErikson Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121335  
Subject: Prepayment of estimated state taxes Date: 12/15/2000 10:43 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Here is a quote from the Investment Tax Guide 2000:

"Remember that you can't simply go wild regarding the prepayment of state taxes. The IRS may disallow deductions for large estimated state income tax payments solely to increase itemized deductions."

Suppose I have a spike in income for the year 2000 as compared to 1999. And suppose I've been paying minimal estimated state taxes to qualify for the safe harbor rule for avoiding tax penalty. And then on 12/31/2000, I send in a check to complete the payment of my state taxes for 2000 - suppose this check is an order of magnitude more than what I've been paying in previous quarterly installments. Would the IRS disallow the state tax paid deduction in this case? Or would they only disallow the deduction if you paid more than what you owed in state taxes?

Thanks,
Carl Erikson
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement