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re: Tax Filing Extension
Posted on 4/15/24 at 3:06 am to Weagle25
Posted on 4/15/24 at 3:06 am to Weagle25
quote:
Those are estimated taxes that you pay quarterly. You have to pay 100% by April 15th.
With estimated taxes you avoid a penalty if you pay 90% of the current year's final number or 100% of the previous year's tax due whichever is lower by the 15th. It is shorthand for quarterly payers so as long as you pay 100% of the last year's total by the 15th you avoid any penalties but you could have a big check to cut about a month after your 3rd quarterly for the year. Been there done that but I knew it was coming.
IIRC withholdings payers don't have the 100% of last year to rely on I think they have to pay the 90% of the current year. Don't quote me or rely on that.
Somebody mentioned up above:
quote:
You pay an estimated number, if you overpay it goes towards next year.
If he over pays he will be due a refund just like if he had overplayed by withholdings. If he pays quarterly estimated taxes he can choose a refund, to apply the balance to next year's estimated taxes, or any combination of the two.
DO NOT TAKE TAX ADVICE OFF THE INTERNET!
To answer the OPs question his CPA can and should provide him with a number that he needs to pay to be penalty free.
There is a third way but I won't bother with it but the standard 2 ways to get an extension are to file a Form 4868 either by e-file or paper. The form's Part II will have a line for estimated 2023 tax liability, total 2023 payments, balance due and the amount you are paying.
The instructions for 4868 will contain this information:
quote:
Late Payment Penalty
The late payment penalty is usually ½ of 1% of any tax (other than
estimated tax) not paid by the regular due date of your return, which
is April 15, 2024, for most people. It’s charged for each month or
part of a month the tax is unpaid. The maximum penalty is 25%.
The late payment penalty won’t be charged if you can show
reasonable cause for not paying on time. Attach a statement to your
return fully explaining the reason. Don’t attach the statement to
Form 4868.
You’re considered to have reasonable cause for the period
covered by this automatic extension if both of the following
requirements have been met.
1. At least 90% of the total tax on your 2023 return is paid on or
before the regular due date of your return through withholding,
estimated tax payments, or payments made with Form 4868.
2. The remaining balance is paid with your return.
Posted on 4/15/24 at 9:52 am to Obtuse1
quote:
With estimated taxes you avoid a penalty if you pay 90% of the current year's final number or 100% of the previous year's tax due whichever is lower by the 15th. It is shorthand for quarterly payers so as long as you pay 100% of the last year's total by the 15th you avoid any penalties but you could have a big check to cut about a month after your 3rd quarterly for the year. Been there done that but I knew it was coming. IIRC withholdings payers don't have the 100% of last year to rely on I think they have to pay the 90% of the current year. Don't quote me or rely on that.
Not sure if I’m missing the point of your post, but the 90% thing refers to estimated tax underpayment penalties, not late payment/interest penalties, which is the consideration at extension time.
Posted on 4/15/24 at 12:31 pm to Obtuse1
quote:
With estimated taxes you avoid a penalty if you pay 90% of the current year's final number or 100% of the previous year's tax due whichever is lower by the 15th. It is shorthand for quarterly payers so as long as you pay 100% of the last year's total by the 15th you avoid any penalties but you could have a big check to cut about a month after your 3rd quarterly for the year. Been there done that but I knew it was coming.
Again, estimated taxes are different than the taxes you owe on your return on April 15th.
You owe 100% of your actual tax liability by April 15th whether you pay estimated taxes or just do withholdings. It doesn’t matter.
The estimated tax rule you are referring to is what you owe each quarter to avoid penalty.
quote:
IIRC withholdings payers don't have the 100% of last year to rely on I think they have to pay the 90% of the current year. Don't quote me or rely on that.
You don’t know what the frick you’re talking about so quit giving advice or correcting people who do know what they’re talking about.
There are not separate rules for people who withhold and people who pay estimated taxes. It’s just usually if all your income is withheld on, then you don’t have to worry about the rule.
The rule for estimated taxes is you have to pay 100% of prior year or 90% of current year (unless you have a high AGI then it’s 110% or 100%)
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