Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Next Thread
Author: reitsbyziggy Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121566  
Subject: Timing Estimated Tax Payments-Form 1041 K-1 Date: 12/10/2012 10:58 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
My mother passed away in February of 2012. She had a substantial amount of deferred interest from US savings bonds and therefore a decision was made to distribute the Form 1041 income to the heirs thru K-1 Forms. The Estate will have a Fiscal year end of January 31, 2013. I understand that each of the heirs will be required to roll this income into our calendar year 2013 tax return.

My question relates to the timing of required estimated tax deposits to avoid penalties. Is this January 31, 2013 income recognition considered a first quarter 2013 event and the estimated tax associated with it due by April 15, 2013 in order to avoid penalties for monies not deposited within the tax year or can it be just paid by April 15, 2014 when filing the 2013 tax returns?

I realize there are exceptions for estimated tax penalties such as the 90% rule of actual 2013 tax liability or the 100% rule (110% for higher income Taxpayers) of equal quarterly deposits of our actual 2012 liability. Some of the heirs may have declines in income which would cause their normal payroll withholding to fall short to comply with these exceptions.
Print the post Back To Top
Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 117090 of 121566
Subject: Re: Timing Estimated Tax Payments-Form 1041 K-1 Date: 12/10/2012 11:20 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
My question relates to the timing of required estimated tax deposits to avoid penalties. Is this January 31, 2013 income recognition considered a first quarter 2013 event and the estimated tax associated with it due by April 15, 2013 in order to avoid penalties for monies not deposited within the tax year or can it be just paid by April 15, 2014 when filing the 2013 tax returns?

Let's see what's behind Door #3.

Yes, it's January 2013 income, but the ES payments can be spread through the four TY 2013 payments.

Phil
Rule Your Retirement Home Fool

Print the post Back To Top
Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 117091 of 121566
Subject: Re: Timing Estimated Tax Payments-Form 1041 K-1 Date: 12/10/2012 11:51 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Yes, it's January 2013 income, but the ES payments can be spread through the four TY 2013 payments.

Phil
Rule Your Retirement Home Fool


As always, Phil advice is correct.

Just a comment, because I am acquaited with a couple of people who have a history of tax issues. If the beneficiaries have seen their income decrease, they might be tempted to defer estimated payments and spend the money. It isn't your problem, but depending on how well you know who is asking for advice encouraging them to make all of the estimated tax payment might be appropriate.

Print the post Back To Top
Author: reitsbyziggy Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 117097 of 121566
Subject: Re: Timing Estimated Tax Payments-Form 1041 K-1 Date: 12/10/2012 4:20 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
One thing I didn't think about that Phil brought to my attention is that these payments could be spread out to the 4 quarterly estimated payments. That is different and probably safer than delaying it until filing the 2013 return on April 15, 2014.

As to your point vkg especially with these low interest rates it makes sense to just make the entire estimated payment quickly rather than be tempted to spend the money.

Thanks to both of you.

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Next Thread
Advertisement