So, I've started on my path of self-employment, and now the deadline is closing for the first estimated tax payment. Stupidly I did not save enough. Roughly my quarterly tax payment should be about 881. But I only have about $500. Am I screwed? Can I make up for the difference on the next estimated tax payment?
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"Hrrglburf" wrote
Live and learn. Yes, pay as much as you have, and make up the difference as soon as possible (even making 5 payments if necessary) to reduce any under-estimated penalty.
-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net
Pay the $500 now. Make up the difference next quarter.
At the level of income you appear to have, I'd say the chances are very low that there would be any penalty or interest for your late payment. If you also have employment income, you could increase your withholding from that, because that withholding will be assumed to occur evenly throughout the year. Seth
With he long method of computing penalty on 2210, the fine is computed per diem. So as soon as you can pay matters. The IRS will automatically compute the penalty using the shorter method and have a possibly higher amount. You can compute these penalty forms yourself to see how to avoid it or minimize it. Be forewarned, these are long, nasty forms. Another motivation for 2210 and 2210AI is that they provide two methods of estimating taxes and one may be result in delayed tax payments. The rule of thumb is that if more of your income in the first half of the year, use the (short) equal installment method. If more is in the second half of the year or highly variable, use the (long and nasty) annualized method.
Yes, that should accrue a minor ES penalty which will be determined on 4/15/2007 Catch up on the 6/15 deposit
Send in what you can and follow with the remainder. The penalty, if the amuonts are correct, is simple interest of
7% for the time the underpayment was overdue. Does your $881 estimate include SE taxes? Did you deduct expenses from your Schedule C income? Did you pay more, or less than $3,500 for 2004 taxes? If less, divide 2004 taxes by 4 and that's all you have to pay each quarter this year without a penalty. The rest will be due April 07. ed
This is what I advise my clients. There may be a little penalty next year but it should not amount to too much. Missy Doyle
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