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I'm trying to figure out if I need to pay estimated tax. The IRS forms seem to assume that I have a better handle on what my annual income will be; it's designed for someone who has predictable self-employment income, and ideally knows what (if at all) her salary/wages will be and thus what's going to be withheld from them.
I have to sort this out by Monday. Ghu knows why, but the second "quarter" for these purposes is two months long. If I'm lucky, Christine will be at rassef this evening, and be able to offer advice or at least moral support.
If all else fails, I'll come up with a halfway-plausible number, send them the money, and figure I can always get it back later. Safer that way.
Ugh.
I have to sort this out by Monday. Ghu knows why, but the second "quarter" for these purposes is two months long. If I'm lucky, Christine will be at rassef this evening, and be able to offer advice or at least moral support.
If all else fails, I'll come up with a halfway-plausible number, send them the money, and figure I can always get it back later. Safer that way.
Ugh.
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From:
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The easiest way is to pretend predictability. If you've made $X in the first quarter, multiply that by four and make any estimated payments based on that annual number. When the second quarter comes around, take your annual income for the first half of a year, double it, and then calculate your estimated tax based on that. Then, depending on what you paid in the first quarter, either make a new payment for whatever amount makes sense or make no payment. Do the same with the third and fourth quarters. The IRS understands about people with nonlinear income streams, and does not expect four identical quarterly tax payments. If you make all your money in the fourth quarter, you could legally pay all your estimated tax at the end.
B
From:
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From:
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If you base it on this year's estimated income, they won't penalize you if you pay 80% of what you end up owing. So if you are coming up short in the fourth quarter, you can add some $ then and come out OK.
From:
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Last year I had a nice salary. So did Andy. I hope to get back there, but the only income this year has been unemployment insurance--from which income tax is being withheld--and freelancing.
I'll sit down with pen, paperwork, et cetera, and come up with a rough number.
I'm just annoyed that while the law doesn't expect predictability, the worksheets seem to.
And that it's going to be another hot day, and thus no fun to sit out here by the computer. (For reasons of layout and the lack of doors, the only room we have air conditioning in is the bedroom.) But I can print the worksheet, then take it into the bedroom.
From:
suggestions
Compute the tax on that, divide it by two, and that's the amount the IRS expects you to pay for the whole first half year. If it's more than you've paid already, make up the difference, otherwise make no payment until your third quarter estimate.
I once had an exam where most of the examinees spent a lot of time trying to work out the answer to an incompletely stated question (typing error not caught in proofreading). I think that now, as then, the right answer is to refuse to speculate and base your answer on the facts: you're broke, don't know what you'll be making even next week, let alone the next six months.
From:
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B
From:
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Your algorithm makes sense--I was still being confused by the IRS's worksheet, which seems designed to confuse.