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In general, I send 4th quarter estimated taxes to the IRS in December, instead of January when they're due. So, for my dad, my plan was to send in his $4k ($3k Fed'l and $1k State) for 4th quarter 2017 this month. However, a couple of years ago he sold a house with an installment loan, and the principal amount of $250k is due to him at the end of this year. For a number of reasons, I don't think the buyer will be sending him that amount until Spring 2018. So I figured I should just send in the $4k now, so it's deductible for 2017.

Keep in mind that paying in 2017 to be deductible only applies to the state estimate payment. Whether you pay the federal 4th quarter payment in December 2017 or January 2018 is irrelevant. Either way you take credit for it on the 2017 return which is due in April 2018.

But what if I do that, and the $250k arrives on December 31, 2017? Then he'd owe an additional $40k Fed'l.
- Could I send the $40k by the Jan 16, 2018, due date? That would make two 4th-quarter payments. Would the IRS accept the 2nd payment, or would I have to wait until I file his 2017 taxes (in March 2018)?


Sure, you can do that. You can make as many estimated payments during the year -and the January period following - as you want. But you shouldn't try to make a payment very long after January 16. Because if you wait until February or later, IRS has a way of applying it as a first quarter payment for the next year. Even if you use the voucher for the earlier year. Besides, after January 16, any underpayment penalty for the 4th quarter isn't going to be very much, because the interest rate is pretty low, and there aren't that many days involved.

- If I can't send a 2nd 4th-quarter payment, would there be a penalty for underpayment?

That depends on whether your scheduled payments are sufficient to prevent a penalty based on the prior year. If so, you don't have to increase them.

But given the dollar amounts involved you ought to touch base with the CPA just so she knows what you're planning to do.

Bill
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