Quarterly payments vs. adjusted witholding?

I can think of any number of problems I'd happily trade you for.

No. If you care about what TT thinks, tell it about the increased withholding and it won't bug you about ES payments, but I wouldn't bother. Just do what you were planning on doing.

-- Phil Marti Clarksburg, MD

No. I've always preferred adjusting withholding, as I can set it and forget it. Another inconvenience of quarterly payments is that the IRS expects you to pay in each quarter for the excess income of that quarter. But if you use extra withholding they don't care which quarter the extra income was earned. Finally, don't forget to take advantage of the "safe harbor" rule. There's no underwithholding penalty if your withholding for year N is at least your total tax for year N-1 or 90% of your tax for year N. So if you think your income is going to go up, all you have to do is arrange for your withholding to match your previous year's tax, you don't have to estimate the actual extra income.

-- Barry Margolin, snipped-for-privacy@alum.mit.edu Arlington, MA

"Bert Hyman" wrote

Either way is fine, as long as enough is withheld or paid by estimates.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Because Withholding is applied equally to all tax quarters, whereas Installment, or Estimate, payments can not be applied retroactively, you are always safer to pay withholding than installments.

ed

The IRS doesn't care. You can increase your withholding instead of making separate estimated tax payments. See the instructions to Form 1040-ES, in the middle of the middle column on the first page under the heading "Increase your withholding." You can increase your withholding by reducing the number of withholding allowances claimed, or through a voluntary withholding agreement, by filing a new Form W-4 with your employer.