It’s trivial to set up a year’s worth of quarterly estimated payments, but yes, whatever works for you. We have no income where taxes could be withheld so we’re kind of stuck.Our income is very level over the year, but has extreme highs and lows during the year, and we travel so much, I just didn't want to figure out what the estimated should be per quarter as well as rely on getting connected to schedule the payments. We spend over 2 months on a boat, often with no cell service, as well as land trips. (currently in Mexico). It's actually quite amazing how many gaps there are in cell coverage. We also do a large conversion the first of the year with no withholding, and a second one in December when we have a very good bead on the years total income and tax due. At least the government is nice enough to allow for people to use whatever system works for them.I used to try and cut it closer, but took someone’s advice and just make 3 estimated payments for 110% of last year’s taxes and make January’s payment at about 95% of my estimate and the rest in April.The trick is to find the sweet spot, where you withhold just enough to avoid the underpayment penalty. ("Safe harbor"). We always aim for having 90% + 500 cushion withheld from this years earnings, although there are other ways to achieve safe harbor that include paying 100% or 110% of last years taxes withheld, which might work better if your income is significantly increasing every year. That way, you are getting the max amount of your earnings paid to you instead of giving an interest free loan to the government in order to get a refund of excess taxes paid. This year, our total tax bill is close to 29.5. We had just under 27k withheld, so avoid the under payment penalty by about 500.
Statistics: Posted by murrays — Sun Mar 03, 2024 5:40 pm — Replies 42 — Views 2678