Author Topic: Should I be paying quarterly taxes?  (Read 624 times)

leighb

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Should I be paying quarterly taxes?
« on: August 19, 2017, 07:44:04 PM »
So every year I've gotten a tax refund from the Feds, not always the state. This year one I'm making more money off the rentals than I have in past years. Last year I made $15,000 from the rentals, this year I'm on track to make $40,000. Which makes me think I should be paying quarterly taxes. I'm afraid to both over-pay and to have underpaid my taxes, I hate fines and the IRS is scary.
From what I've read they say to look back at your last years taxes to estimate your quarterly taxes. But that doesn't seem to help if last year I was not making enough money to tip into needing to do things quarterly. So here are my questions:

1) Can/should I start paying quarterly half way through a year?
2) Am I right to estimate my increased taxes to be (40,000-15,000)* tax rate? When I do that and subtract it from my refund last year I owe about $2000.

Also what if, I pay quarterly under one assumption (I'm making $40,000) but next month that assumption turns out to be way off. Am I then penalized for not having a business with steady predictable income?



katsiki

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Re: Should I be paying quarterly taxes?
« Reply #1 on: August 19, 2017, 07:52:16 PM »
Do you do your own taxes?  If so, I would do a mock return with your expected numbers for 2017.
"busy eating lentils in a van by the river"

terran

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Re: Should I be paying quarterly taxes?
« Reply #2 on: August 19, 2017, 08:18:22 PM »
As long as you pay at least what you owed last year you won't owe any penalties. You may have to come up with some extra at tax time of course though. If you have an AGI over $150k then the safe harbor is 110% of last years taxes.

leighb

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Re: Should I be paying quarterly taxes?
« Reply #3 on: August 19, 2017, 08:39:55 PM »
As long as you pay at least what you owed last year you won't owe any penalties. You may have to come up with some extra at tax time of course though. If you have an AGI over $150k then the safe harbor is 110% of last years taxes.
So if I got a refund, I'm good.

terran

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Re: Should I be paying quarterly taxes?
« Reply #4 on: August 19, 2017, 09:03:56 PM »
Onl
So if I got a refund, I'm good.

Probably. More specifically, as long as you're withholding at least as much this year as you owed last year (what you withheld less what you were refunded) then you're good. You'll still owe any additional taxes, you just won't owe any penalties on underpayment.

leighb

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Re: Should I be paying quarterly taxes?
« Reply #5 on: August 20, 2017, 05:59:06 PM »
Okay, then I probably should do quarterly then to get to the amount I withheld last year. I've quit my full time W2 job as of last month. So my monthly deductions have stopped. Meaning that I will not have a third of my deductions taken out. So I will need to do deductions to make up for that difference.