GoFuckYourself.com - Adult Webmaster Forum - View Single Post - The IRS charges if you don't pay estimated tax?

PersianKitty · 06-18-2005, 06:59 PM

Oh it gets even better..

Did you know that if your prior year's adjusted gross income exceeded $150,000, or $75,000 if you filed a separate return from your spouse, then you must pay 110% instead of 100% of last year's total tax as estimated tax or you could face penalties if you end up owing.

Also... you may not realize it but when you work for an employer (where you receive W-2s at year end) you are paying estimated tax everytime the employer deducts Federal Income Tax from your paycheck...rather than quarterly.

As a sole proprietor or business of any sort, if you don't count yourself as an employee of the business and pay yourself a regular salary in which you also deduct payroll taxes and pay them to the government, then you're expected to pay estimated taxes during the year. For my S-corp, I pay myself an annual salary (on paper) which helps to reduce the net income on my business. It also allows me to pay employment taxes into Social Security and Medicare so that when I'm old and grey I can receive benefits (if the SSA is still around then).

The standard rule for estimated taxes is that if you owed any tax at all in the previous year (not that you had to pay on Apr 15th cause you hadn't paid enough, but if you had enough income to require you to owe income tax), then you are expected to pay estimated taxes for the next tax year. Penalties are usually 1/2 of 1% per month of the net tax due and apply from April 15th even if you filed a 4-month extension unless you paid at least 90% of the of the total tax due by April 15th. There is also interest access at the rate of 3% over the Federal Short Term Rate which right now is 3% itself but was 1 and 2 percent during 2004. The dates would run from the end of the first quarter when the first payment was due, so essentially if you filed and paid your taxes on April 15th and were required to pay quarterly estimated taxes but didn't, you'd owe approximately interest and penalties per month for 12 months on the first quarterly amount, plus 9 months on the second quarterly amount, 6 months on the third and 3 months on the fourth.

I've heard of them come back and ding people for being a day or two late with the estimated payments in any given quarter. Funny how they don't give you interest on overpayments for their use of your money unless it's their fault you overpaid.

Okay.. I have a headache now.

06-18-2005, 06:59 PM
PersianKitty Meow Media Inc. Industry Role: Join Date: Jul 2001 Location: In the valley of the sun, cactus, tacos, tequila, and nod Posts: 7,785	Oh it gets even better.. Did you know that if your prior year's adjusted gross income exceeded $150,000, or $75,000 if you filed a separate return from your spouse, then you must pay 110% instead of 100% of last year's total tax as estimated tax or you could face penalties if you end up owing. Also... you may not realize it but when you work for an employer (where you receive W-2s at year end) you are paying estimated tax everytime the employer deducts Federal Income Tax from your paycheck...rather than quarterly. As a sole proprietor or business of any sort, if you don't count yourself as an employee of the business and pay yourself a regular salary in which you also deduct payroll taxes and pay them to the government, then you're expected to pay estimated taxes during the year. For my S-corp, I pay myself an annual salary (on paper) which helps to reduce the net income on my business. It also allows me to pay employment taxes into Social Security and Medicare so that when I'm old and grey I can receive benefits (if the SSA is still around then). The standard rule for estimated taxes is that if you owed any tax at all in the previous year (not that you had to pay on Apr 15th cause you hadn't paid enough, but if you had enough income to require you to owe income tax), then you are expected to pay estimated taxes for the next tax year. Penalties are usually 1/2 of 1% per month of the net tax due and apply from April 15th even if you filed a 4-month extension unless you paid at least 90% of the of the total tax due by April 15th. There is also interest access at the rate of 3% over the Federal Short Term Rate which right now is 3% itself but was 1 and 2 percent during 2004. The dates would run from the end of the first quarter when the first payment was due, so essentially if you filed and paid your taxes on April 15th and were required to pay quarterly estimated taxes but didn't, you'd owe approximately interest and penalties per month for 12 months on the first quarterly amount, plus 9 months on the second quarterly amount, 6 months on the third and 3 months on the fourth. I've heard of them come back and ding people for being a day or two late with the estimated payments in any given quarter. Funny how they don't give you interest on overpayments for their use of your money unless it's their fault you overpaid. Okay.. I have a headache now. __________________ Wondering what webmaster programs PK uses? Check them out here!