How many of you pay estimated vs paying the penalty at the end of the year and just owing a big lump sum? Any good arguments for one or the other?
Estimated Taxes?
- Thread starter EricVonDoobie
- Start date
I pay the penalty for Federal. State sales I have to file continuously. I'll likely start paying quarterly soon as penalties can be expensive. But for my own psychological well being, I prefer to pay the penalty for now. Plus, there is the chance that I might die without paying some taxes. That is a big plus.
If your income isn't pretaxed by your employer, then the IRS expects to you to prepay your taxes, or you get penalized.
Yep, that's what I mean. I suppose that's what the "penalty" is referring to. Like I said, just save 25% of your income all year long, subtract your business expenses and keep it squeaky clean. Pay up by April 15th and you're all good.
I got put on quarterlies a while back and at first I hated the idea of not having 'all' my money to play with all year, you figure you can make way more on it than you'll pay in penalties... However I've been doing it quarterly and kinda grew to appreciate it vs penalties. Fucked though how I've already paid for this years first quarter and haven't finalized my 2012 return where I know I'll pay more above/beyond the estimates. There was talk of doing monthly too but that's a bit much.
Form 1040-ES, Estimated Tax for Individuals
you may need a different form depending on how your biz is structured
You'll end up paying more than 25%. They charge you penalties + interest if you don't pay quarterly.
Hmmm, really? Well that isn't very nice. I'll have to ask my tax guy, he usually informs me on the best way to approach taxes and he did mention I should probably pay quarterly...Ah fuck. Well there's always this year.
I really don't pay anything above 25% to be honest. On the other hand I don't have an LLC.
Yes the penalty is a lot less than 25%. What I mean is if you're supposed to pay 25% in taxes and you don't pay quarterlies, then the IRS will charge you interest + penalties and you'll end up paying more than 25% total in taxes.
I have been using https://www.eftps.gov/eftps/ for a couple years, it is pretty easy once it is set up and I haven't had any issues so far
If I remember correctly, the penalty for not paying your estimated quarterlies (or underpaying them) is ~3%.
Tell me where you can get a business loan with a 3% interest rate :evil_laughter:
^ Case by case basis - if the gov wants to fux with you this is a good way to do it. Just finished paying a 26K fine because the guv lost my paperwork from 2009 and didn't tell me for 3 years then hit me with a fine for not having my papers filed (yet submitted, and money paid) - 50% fine + comp.interest for 3 years 
. I fought it like a mofo but here the tax courts are owned by the cra so it's useless... Anyway, more money more taxes. I didn't 'have to' pay quarterly until I started making bigger monies.
. I fought it like a mofo but here the tax courts are owned by the cra so it's useless... Anyway, more money more taxes. I didn't 'have to' pay quarterly until I started making bigger monies.