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Q4 Estimated Taxes

TY2007 was the first year that I paid estimated taxes, so I am a little confused by the rules. I have two questions:

1) Can Q4, FEDERAL, estimated taxes paid in 2008 but before January 15 be applied to my 2007 federal return?

2) Am I correct in assuming that Q4, STATE (I am a California resident), estimated taxes paid in 2008 but before January 15 CANNOT be applied to my 2007 state return (it must be applied to my 2008 return)?

Extra credit: If the answers to both #1 and #2 are correct, why do the federal and state have different rules??? #2 caught me by surprise (assuming it's true, of course).

Reply to
hawaiianengineer
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For 2007 estimated tax payments were due on 4/16/07, 6/15/07, 9/15/07, and 1/15/08. All 4 payments are/were for your _2007_ taxes.

Calif rules and dates are the same as above.

Perhaps you are confused about being able to _deduct_ state taxes on schedule A (if you itemize) from your federal tax which has nothing to do with _paying_ your taxes.

You can only use state taxes as a _deduction_ for the year that the tax was actually paid. For example, people who paid state estimated tax for

2006 made their last payment in 2007 so they could include it as a deduction on their 2007 federal tax along with their first 3 payments made in 2007 for their 2007 tax.

Next year, on your 2008 federal tax you can deduct (assuming you can itemize) the 2007 state payment you made in January along with the first three 2008 state payments that you pay in 2008 and any other state withholding you might have.

Reply to
Ernie Klein

All estimated tax payments for 2007 are claimed as payments on your 2007 return regardless of when they were made. This is true for both Federal and state.

What may be confusing you is how you treat the state payments on your Federal Schedule A. Your 2007 Schedule A will show the total of the following:

  1. Any 2006 state balance due paid in 2007.
  2. Any state estimated tax payments made in 2007.

A state estimated tax payment for 2007 made in 2008 will be dealt with on the 2008 Federal Schedule A.

Many people, I for one, find it simpler to make the final state estimated payment in December so that everything regarding the year is in one place. If you wind up making your last 2007 state ES payment in 2008 and get a refund when you file the 2007 return, you have some strange calculations to do when preparing your 2008 Federal return.

Reply to
Phil Marti

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