1. Home
  2. Taxes General Forum
  3. skip last estimated tax payment ?

skip last estimated tax payment ?

After I finished my 2007 return, it looked like I would likely have an excessive tax due for 2008, due to some self-employment income. So I "signed up" to make 4 quarterly estimated-tax payments against my 2008 taxes, with the last due in January 2009.

However, preliminary calculations show that I'll be in good shape (unlikely to have an excessive penalty-triggering tax due) even if I never make that final payment in Jan '09. My question is, am I in good shape as regards the "estimated tax payments made on-time" if I simply skip that last payment ? I would assume so, since my payments appear to be "enough" and they are front-weighted in the sense that I'm skipping the last payment, not any earlier ones.

Thanks !

Reply to
JGE
Loading thread data ...

No problem. There will probably be a lot of people in the same boat this year.

Reply to
DF2

My question is, am I

Estimated tax payments really aren't a big deal. The worst that can happen is that you have to pay interest on what you should have paid; and the interest rate is pretty low now. And it would just be interest from the date of the last payment.

I used to think there were penalties for failing to pay enough, but its just the interest.

Reply to
jack

It's what, 0.5%/ month, 6% per annum? That is a fairly low interest compared to some interest rates, but it's really low compared to what some states charge:

formatting link
computed at the rate of 3 percentage (3%) points above theprime rate for every month or fraction of a month the tax is unpaid,compounded annually. At the end of each calendar year, any tax,penalties and interest remaining due will become part of the balanceon which interest is charged.
formatting link
all cases, interest will be charged at a rate of 1% per monthfrom the date the tax should have been paid (April 15, 2008) untilthe date of payment. In addition, the state may assess the followingpenalties:

  • Late Payment Penalty. Wisconsin may also assess additional late payment penalties at a rate of 18% per year on the outstanding balance if you do not pay the total tax due by August 15, 2008.

formatting link
* 2 percent of any amount that is paid up to 30 days late; * 10 percent of any amount that is paid 31 or more days late. .... and so on.

Reply to
DF2

Those penalties on late payments, not on missing estimated payments. At least the way I am reading it. You can't be late until it is due, and it is not due until April 15th.

Reply to
jack

I would be remiss in not pointing out that it can affect AMT. If you will be in AMT next year but not this year you will want to make darn sure you get payments in this year. And visa versa.

I learned this the hard way.

Reply to
jack

Think of April 15th as "tax reconciliation day." Taxes are due as you earn the money.

Reply to
Brew1

Expect the same or similar rates on late quarterlies. I can't confirm that for all, but I know that is the for some.

Reply to
DF2

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.