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Financial Planning / Tax Strategies


Subject:  Re: Confused About Estimated Tax Payments Date:  4/7/2002  4:55 PM
Author:  edcosoft Number:  60067 of 131742

Phil's answer: This is not true. You can spread that payment throughout the year without
penalty. If it turns out that there is additional income not subject to
withholding later in the year, there might be a need to do the annualized
income calculation, but there's no need to pay 100% of the estimated tax
with the 4/15 payment.

You're correct about no need to pay the entire estimate in the first quarter. However, using the annualized income method only helps if you have MORE income in later quarters than in earlier quarters.

All the methods (except AI) presume you earned your income evenly over the 4 quarters. Your options are whether you average or apply withholding, but you can only use estimate payments in the quarters they are made. Applying withholdin the quarter withheld only helps if youhad more withholding in early quarters than in later quarters. The AI lets you use income in the quarters actually earned. ed
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