Quarterly estimated tax payments just got trickier

Standard

The Tax Cuts and Jobs Act may make paying quarterly estimated tax payments on April 17 a little more complicated. That’s because tax law changes may have altered how much you will owe this year vs. last. Luckily, if you make the same or less this year as you did in 2017 you can use the safe harbor option. Go ahead and pay the same amounts you did last year (or 110 percent of last year if you make $150,000 or more).

The problem is that if you lower your estimated payments to match to expected tax rate decreases, you open yourself up for a penalty should you not estimate it correctly. The Safe Harbor option says 1) pay the same total tax you incurred in 2017 (110% of it if you make more than $150,000), or 2) 90% of your 2018 liability by January 15, 2019, preferably in 4 equal installments on their due dates.

So there is the problem. If you don’t pay last years tax and you screw up your 90% calculation and when you prepare your 2018 return you still owe….a penalty may come with that return.

Another joy to the new tax legislation. Yes, this is a LOT more simple, said nobody.

We are available this summer to help you figure out how 2018 will impact you.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s