Estimated tax payments

[Justine2031]

Hello all,

I have been making quarterly payments throughout the year and I underestimated how much I would owe as I ended up making more this year than last year. I will be making my last quarterly payment by the January 15th deadline, but my question is, am I allowed to make another payment after this deadline to contribute to my 2018 estimated taxes? (I wanted to make another payment in February) Or is the January15th deadline the absolute last chance to make any payments toward 2018 and anything else owed has to be paid in April when filing? Thank you in advance for any assistance on this matter

 

[Taxing Matters]

You could make a payment to the 2018 taxes in February if you wish. It will not help to lower any penalty for failure to make sufficient estimated payments (and that penalty is really just an interest charge) though. After the January 15 payment date, the most critical thing is to ensure that the full tax you owe that you have not yet paid is paid by the due date of the return, which for 2018 returns will be April 17, 2019.

 

[FlyingRon]

Note that the law does take into account your increase in pay. As long as you're within 90% of what you owe this year or you paid in estimated tax 110% of what you owed total last year (whichever is lower) you don't owe any penalty. See IRS Pub 17. So if your January payment brings you to 110% of last year, you are likely OK.

Note that this is for the feds, some states have less forgiving policy both for underpayment and for not making equal payments all year (Virginia is a PITA that way). You didn't indicate which state you are in.

 

[adjusterjack]

I underestimated how much I would owe as I ended up making more this year than last year. I will be making my last quarterly payment by the January 15th deadline,

I suggest you study up on the instructions and the form for computing the penalty. If your income fluctuated during the year there is an alternative method that could result in a lower penalty.

https://www.irs.gov/pub/irs-pdf/i2210.pdf

https://www.irs.gov/pub/irs-pdf/f2210.pdf

Also, no reason your last payment has to be the same as the first three. You can increase it to try and cover the difference.

 

[Taxing Matters]

I suggest you study up on the instructions and the form for computing the penalty. If your income fluctuated during the year there is an alternative method that could result in a lower penalty.

Yes, but the Form 2210 is genuinely one of the most confusing forms for a taxpayer to do on his/her 1040 if the taxpayer is not familiar with it. I'd recommend at the very least using a good tax prep software package to do the return and this form. It would make completing it correctly much, much less of a pain in the butt.

 

[adjusterjack]

Yes, but the Form 2210 is genuinely one of the most confusing forms for a taxpayer to do on his/her 1040 if the taxpayer is not familiar with it. I'd recommend at the very least using a good tax prep software package to do the return and this form. It would make completing it correctly much, much less of a pain in the butt.

Agree. I've done them in the past when there was no tax prep software. (Yes, I'm that old. LOL)

 

[FlyingRon]

I had an interesting windfall back in 2004. I went from a modest W-2 income and very little dividend income to a whopping large capital gain.
My partner suggested we avail ourselves of the safe harbor provisions to hold off paying the tax until apr 15. I just made the 4q tax payment.