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Thanks for all the advice on estimated tax payments. One idea running through all this is that if you actually pay the tax you owe as the income comes in, you can get dinged for not filling out and complying with extra forms. That's government for you, I guess.


Well, you can look at it another way. Most folks can estimate this year's income and tax within 10% (not 2003, but in years past and future), or use last years tax (which is probably an overpayment this year). If you think your "paying as you go" you are (miss)using the AI Method already which could be the best deal you ever got from the IRS. Just ignore estimating full year income and multiply your first quarter's actual income by 4 (that's Annualizing). Figure the tax on that amount and multiply by .225 (thats 90% of 1/4). Whatever deduction you can take in the first quarter are leveraged by 4 when annualized to figure the first installment (imagine a $12,000 Capital Loss Carryover instead of $3,000). You also don't have to give them 1/4 of the tax on your year-end distributions or pension withdrawals (Defer them until after September 1). Itemized deductions work the same way (property taxes?).

This gets pretty complicated what with SE taxes if you're self employed, phase in and out of taxable SS if you're retired, AMT for lots of folks, getting all your Child Tax (and other)Credit(s)
in the first quarter, etc. etc. etc. so we publish the only calculator available to compute all this (every year since 1998) at A fully functional demonstrator is available free to estimate full year's tax and compute the first installment and all the safe harbors. There is a registration fee to compute the 2nd, 3rd and 4th installments. good luck ed
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