Value Buy
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Post by Value Buy on Aug 11, 2017 9:33:31 GMT -5
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buystoys
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Post by buystoys on Aug 11, 2017 9:45:49 GMT -5
Quarterly taxes have been difficult for me to estimate. We've gotten refunds the last three years, so I didn't pay any quarterly taxes the past two. I did pay some tax this year when I did our IRA withdrawal, but I think our medical expenses will get us a refund. Again.
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Value Buy
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Post by Value Buy on Aug 11, 2017 9:59:36 GMT -5
We both retired in October 2014, and had more than enough with held to cover the entire year's taxes on state and federal returns to have refunds, which we held over for the government so as no quarterly withholding needed for half of 2015. Or so I thought.
Turns out we still had a refund with the Fed's, because our income consisted of SS and stock dividend income, and a far cry from what we earned in 2014 and did not hit any retirement accounts and were in a lower tax bracket. Since we were new to the quarterly reporting, we actually made one in January of 2016 (for 2015) for the last quarter, causing the over payment. We did owe the state $24. In 2016 between interest mortgage deductions on two homes, plus lots of medical expenses deductions, including Medicare and the secondary coverage insurance premiums we were again ok. (we could pay off both mortgages but I prefer stock and retirement account appreciation which is higher right now than our loan rates IRA accounts are growing faster than what we are withdrawing) I think we are good until the last quarter again this year., but probably should have made payments for the third quarter for the federal. I will wait until the January deadline and pay in the fourth qtr. State, we owed the quarterly payments this year. This year we decided to start hitting the retirement accounts because of the extra mortgage payment and I refuse to sell stocks that we own out of the retirement accounts, and re-invest the dividends, growing these accounts, as we are going to hit automatic with drawls in three and four years anyway, and do not want large with drawls to raise our tax basis rate in our later years. Our automatic with drawl rate will be higher than our SS payments and I want to build the regular accounts for a few years to receive some decent dividend payments for us.
I only say this, because I find it is time to simplify the tax codes. I can see many people who grow increasingly frustrated with the system where even if you want to be honest in the game, you can still completely screw up your tax penalty numbers without even trying, or come up with such a large over payment you are loaning the government interest free money at your expense like we have. And retirees, unless you own your companies or were major employees of large corporations with lots of accumalated payouts, etc should not have to go to a CPA and pay large fees for something that should be a one page return.
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Value Buy
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Post by Value Buy on Aug 11, 2017 10:05:42 GMT -5
Quarterly taxes have been difficult for me to estimate. We've gotten refunds the last three years, so I didn't pay any quarterly taxes the past two. I did pay some tax this year when I did our IRA withdrawal, but I think our medical expenses will get us a refund. Again. Yes, the emotional toll of deciding whether you owe or not and guess correctly gets to you. We use the intermediate level Turbo tax and do our own taxes. Based on some comments on the board, I too, am waiting to get hit with mis-caculations and back taxes. It is so unfair when you feel you are being honest about them. Last year we were shocked at how small our federal bill was. We said this was impossible, and double and triple checked, then pressed the file button with our eyes shut.........and will be waiting for the FED'S to tell us we were wrong in about 2018..... (we did get a paper Federal worksheet and looked at our net income total, and we think we were correct )
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Deleted
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Post by Deleted on Aug 11, 2017 10:12:04 GMT -5
I did first and second together last year and skipped fourth. I haven't made any this year yet, think I'll do the January thing. Maybe next year I'll do 'better'.
I have no real desire to give this admin money any sooner than I need to.
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Deleted
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Post by Deleted on Aug 11, 2017 10:20:02 GMT -5
I just remembered we have to file an extension this year due to family llc trust, something filing first.
I know that doesnt change my quarterlies, I'm hijacking, but Anne, you have issues look too? Do you always need to file an Extension?
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Value Buy
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Post by Value Buy on Aug 11, 2017 10:20:54 GMT -5
I did first and second together last year and skipped fourth. I haven't made any this year yet, think I'll do the January thing. Maybe next year I'll do 'better'. I have no real desire to give this admin money any sooner than I need to. Your last sentence is not really necessary, as you should not have to give any government agency one dollar more (or earlier in time) then they require it. Since you did mention it, do you not worry a government agency helping the poor and incapacitated, might have to cut a program back because you are with holding money that goes to them? Since so many people have gone back to work under this President I think the total withholding from hourly workers will grow funds for the Administration anyway without your payment or mine.
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Value Buy
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Post by Value Buy on Aug 11, 2017 10:22:15 GMT -5
We try to pay our quarterlies in one go when we get our estimates from the accountant. It's painful but gets it over with. We still usually owe but you don't pay a penalty if you pay 110% of last year's taxes IIRC. Does this apply to regular citizens or LLC'S only? This is good to know!
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Deleted
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Post by Deleted on Aug 11, 2017 10:23:40 GMT -5
Lmao. Jobs numbers aren't anything awe inspiring. They have been added pretty consistently for awhile.
To the first question, nope.
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Deleted
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Post by Deleted on Aug 11, 2017 10:24:31 GMT -5
Our business llc pays its quarterlies. It was personal quarterlies I was discussing.
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phil5185
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Post by phil5185 on Aug 11, 2017 10:26:59 GMT -5
We're retired, we have no withholding, our entire tax bill is paid via the 4 Quarterly payments and the April 15 payment. We are careful to avoid overpaying the 4 estimates, we make certain that we always owe on April 15, we never get a refund. And quite often we pay the under-payment 4% fee - it is actually a pretty good deal, I like 4% loans, I put the extra money to work elsewhere. My fines are usually under $50.
The average refund in the US is about $3000/yr. That seems ridiculous to me, why do people overpay all year and then wait for $3000 to be refunded to them after year-end? (And these are likely the same people that are paying over 12% to borrow $3000 on their CC's). lol - I blame the K12 system. Maybe the IRS was expecting retired people to continue to overpay $3000/yr? But the dynamic is somewhat different - it is easier to avoid overpaying the Est Taxes than it is to adjust your W4 at work.
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milee
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Post by milee on Aug 11, 2017 10:33:53 GMT -5
We try to pay our quarterlies in one go when we get our estimates from the accountant. It's painful but gets it over with. We still usually owe but you don't pay a penalty if you pay 110% of last year's taxes IIRC. Does this apply to regular citizens or LLC'S only? This is good to know! The 110% "Safe Harbor" applies to regular citizens. I pay the safe harbor amount for my quarterly estimateds - which is last year's total taxes due x 110%. If you pay at least that amount you will not owe any penalties on underpayments even if those underpayments are massive. I do that because our business operations can fluctuate hugely from year to year and estimating the year end taxes owed is next to impossible. The only "gotcha" I'd warn you about if you choose to go the Safe Harbor route, is you can't assume the Safe Harbor amount will always be exactly 110%. One year I remember it was 112%. Here's a link to the publication that covers it. You should probably check this publication or google the current Safe Harbor amount each year if you decide to go this route. www.irs.gov/publications/p17/ch04.html
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alabamagal
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Post by alabamagal on Aug 11, 2017 10:52:45 GMT -5
DH started driving for Uber in May. He only does part time so not huge amount. I may try to do quarterly for Q3 and Q4. I also need to change my withholding since we lost a dependent and college tax credits. Or I may just pay penalty.
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buystoys
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Post by buystoys on Aug 11, 2017 11:15:45 GMT -5
We're retired, we have no withholding, our entire tax bill is paid via the 4 Quarterly payments and the April 15 payment. We are careful to avoid overpaying the 4 estimates, we make certain that we always owe on April 15, we never get a refund. And quite often we pay the under-payment 4% fee - it is actually a pretty good deal, I like 4% loans, I put the extra money to work elsewhere. My fines are usually under $50. The average refund in the US is about $3000/yr. That seems ridiculous to me, why do people overpay all year and then wait for $3000 to be refunded to them after year-end? (And these are likely the same people that are paying over 12% to borrow $3000 on their CC's). lol - I blame the K12 system. Maybe the IRS was expecting retired people to continue to overpay $3000/yr? But the dynamic is somewhat different - it is easier to avoid overpaying the Est Taxes than it is to adjust your W4 at work. That $3000 refund is a little less than our average refund for the past two years. What has gotten us that much is medical expenses. I paid nothing in estimated tax for 2015 and 2016, yet still received refunds. I didn't anticipate our expenses this year, so paid about 5% Federal tax on our AGI. We'll always have medical deductions due to premiums being more than 10% of our AGI, but I didn't expect to need all the services I've had so far this year. Our expenses are already 15% of our gross income this year, so we'll probably end up with enough deductions to get that 5% back plus some. It's also difficult when they make tax code changes AFTER you've paid an estimated tax. That's what happened to us for 2014. We had a large long-term capital gains distribution in July, so I paid an estimated tax on it in September. They changed the code in December so that our income was low enough we owed nothing on the capital gains.
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dee27
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Post by dee27 on Aug 11, 2017 15:43:15 GMT -5
Federal taxes are withdrawn from my pension, but since I now live in another state, pension administration will not deduct state taxes. I pay quarterly on the state taxes, and the accountant's estimates are fairly close. Some years I owe a little; other years, I have a small excess that is applied to next year's state taxes.
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Miss Tequila
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Post by Miss Tequila on Aug 11, 2017 17:30:38 GMT -5
I just remembered we have to file an extension this year due to family llc trust, something filing first. I know that doesnt change my quarterlies, I'm hijacking, but Anne, you have issues look too? Do you always need to file an Extension? I file an extension every year.
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lynnerself
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Post by lynnerself on Aug 11, 2017 20:11:53 GMT -5
We have been retired 2 years. So far we have made few quarterly tax payments. We are trying our best to meet our tax obligation by having tax money taken out of every SS payment, pension payment and IRA withdrawal. It's still a work in progress getting it fine tuned.
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Deleted
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Post by Deleted on Aug 11, 2017 23:13:21 GMT -5
We have been retired 2 years. So far we have made few quarterly tax payments. We are trying our best to meet our tax obligation by having tax money taken out of every SS payment, pension payment and IRA withdrawal. It's still a work in progress getting it fine tuned. This would be me. Unfortunately, I have been silently covering the taxes on DH's SS because if he wasn't married to me, he wouldn't owe ANY taxes because it is his sole source of income. So that just seems fair. I just don't know how I will handle it when my income is based on pension, SS, and withdrawals from my IRA. I might have to tell him then that it is taxed. 20% withholding may not cover his taxes, too. Fortunately, Alabama doesn't tax SS. So that helps.
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Post by Deleted on Aug 12, 2017 3:07:43 GMT -5
It's a darn crapshoot. I'm retired and withdrawing from after-tax savings. I own a lot of mutual funds and, although profitable years are very good news, I can't control the timing of mutual fund distributions. They tend to come at the end of the year and can run $20 or $30K each. (Yes, there IS a way to avoid penalties on these surprises by filling in a form showing the timing but it's complicated.)
So... I made estimated payments on Federal of about $8K for 2015 and it turned out we owed nothing. So I made zero payments for 2016 and owed a lot and then got dinged with something like $50 as a penalty for not making any estimated payments even though I'd owed zero for 2015. This year will be my first filing Single (widowed) and that will be a killer no matter what happens with the investments. I'm paying enough to fall under the "safe harbor" provision and not pay a penalty but we'll see what happens.
Unfortunately, I have been silently covering the taxes on DH's SS because if he wasn't married to me, he wouldn't owe ANY taxes because it is his sole source of income. So that just seems fair. I just don't know how I will handle it when my income is based on pension, SS, and withdrawals from my IRA. I might have to tell him then that it is taxed.
Why not tell him now? I was the financial guru in our marriage and also paid taxes on DH's SS from my income, but he knew it. I didn't tell him in a complaining way- I just wanted him to be informed since he and I voted in every election and I thought he should know. Many of my friends on FB seem unaware that SS is taxed for the "rich" even though our contributions came out of money already taxed. I spread the word.
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MN-Investor
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Post by MN-Investor on Aug 13, 2017 15:15:50 GMT -5
DH retired last summer, so this is the first year with no salary income. I need to do a tax calculation to figure out if I should sell more highly appreciated stock or if we should convert some conventional IRA money to a Roth IRA. We have 6 years until I hit 70½, so I need to get some accurate projections for those years.
I don't mind paying estimated taxes, but, in a sense, I'm more interested in calculating my Minnesota estimated taxes. If I have a high tax year (and Minnesota is a high tax state!) I want to pay my Minnesota 4th quarter estimated tax by Dec. 31 so I have that deduction against the higher income of that year.
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phil5185
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Post by phil5185 on Aug 13, 2017 15:47:51 GMT -5
The year that I retired I received a company buyout package. I prepaid both our home property tax and our State Income Tax for the year ahead - to offset some of the extra income.
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MN-Investor
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Post by MN-Investor on Aug 13, 2017 16:01:40 GMT -5
My first job out of college, in 1975, was in the tax department of a major CPA firm. At that time Minnesota allowed individuals to deduct federal income taxes paid during the year on their Minnesota returns. December was a time for calculating 4th quarter estimates for folks with stock sales and large bonuses. It wasn't that hard, but you had to take in to account the deductibility of fed taxes on MN and MN taxes on fed, so it took a few iterations.
It looks like six states still allow some or all of the Federal income taxes paid as a deduction on their state returns. They are Alabama, Iowa, Louisiana, Missouri, Montana, and Oregon.
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Deleted
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Post by Deleted on Aug 13, 2017 16:05:12 GMT -5
I suck at predicting taxes owed, I consider getting it to plus/minus 1k with my W-4 a success.
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Value Buy
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Post by Value Buy on Aug 17, 2017 9:59:48 GMT -5
I don't prepay unless I know I will be getting a whopper of a profit for the year, in which case I figure at 110% of the previous year. As said above, the penalty is just not that huge. I would think a couple of years of paying fines the IRS will tell you you must pay quarterly payments. I guess they must not do this I know years ago, because of stock dividends and sale profits from stocks, I owed. Got the penalty and it said I must file quarterly taxes. It did not say "please pay quarterly" This was like 20 years ago.
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taz157
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Post by taz157 on Aug 17, 2017 10:09:01 GMT -5
When I worked in public accounting in tax, I would have many clients not pay their estimates payments. They were okay with paying the penalty and the IRS never gave them notices about it.
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phil5185
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Post by phil5185 on Aug 17, 2017 11:49:54 GMT -5
Well, it said that you must file quarterly taxes OR face a penalty. That means that you may choose to be fined - I pay the fines most years, as I recall it's been for 30 years or more. lol, yeah, I don't think they say "please".
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countrygirl2
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Post by countrygirl2 on Aug 18, 2017 8:17:53 GMT -5
I generally just make one or two deposit payments. Used to be hubbys company paid any late fees. But I believe it is based on whether you pay enough of the % owed, may be mistaken. Right now I'm going to pay $10k from the proceeds of a property sale and that's it. If there are penalties, it won't be much.
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Value Buy
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Post by Value Buy on Aug 18, 2017 8:26:50 GMT -5
I generally just make one or two deposit payments. Used to be hubbys company paid any late fees. But I believe it is based on whether you pay enough of the % owed, may be mistaken. Right now I'm going to pay $10k from the proceeds of a property sale and that's it. If there are penalties, it won't be much. Do not forget to pay our beloved state of Indiana their share! I prefer dealing with the IRS rather than the state revenue offices.
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countrygirl2
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Post by countrygirl2 on Aug 18, 2017 9:08:45 GMT -5
We never file estimated with them, so far our owed amount was within the 10% or so.
After this year should be pretty consistent in amounts and I will pay both estimates, but likely only 1 time.
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Value Buy
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Post by Value Buy on Aug 18, 2017 9:42:35 GMT -5
We never file estimated with them, so far our owed amount was within the 10% or so. After this year should be pretty consistent in amounts and I will pay both estimates, but likely only 1 time. That was when you had with holding from your husband's job. Now retired, you are paying on income from passive holdings and rental income. Indiana does not accept all of the deductions the feds allow although they do not tax Social Security. We found the state tax bill was high in retirement, imo, especially paying the extra county income tax. I always thought that was on earned income from working, but they get you on your pension, dividends, and capital gains too.
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