Another Dumb Estimated Tax Question

I know I'm supposed to pay estimated taxes on 4/15, 6/15, 9/15, and 1/15.

I get paid monthly. Am I supposed to pay 3 months' worth of taxes on 6/15 even though I only got paid for two months?

Reply to
Hank Youngerman
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even though I only got paid for two months?

Yes, if you want the benefit of making equal quarterly estimated tax payments -- just as you only pay 3 months' worth of taxes on 1/15 even though you got paid for four months. It evens out in the end.

Reply to
Mark Bole

If you want to keep careful track of all income, you can annualize for (I believe) through March, through May, through August and through December, and pay up the proportional tax on those amounts. Check the dates (from memory). That's an advantage if your income comes late in the year, except interest rates are so low that it's hardly an advantage anymore, unless you don't have the money of course.

Reply to
Ron Hardin

Are you an employee? If yes, then withholding is done on your W-2.

If you are a bona fide contractor, then Q1 is Jan to Mar, Q2 is Apr to May, and one option is to pay tax on your earnings (gross income minus expenses and other itemized deductions) for that period. So Q1 estimated tax would be based on 3 months, Q2 based on two months, Q3 based on 4 months, etc. Second option is to estimate your tax for the whole year based on your annual expected income and deductions, then multiply this tax by 90%, then divide by 4 to get the amount to pay each quarter. If your income varies during the year you should use the first method.

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remove ps

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