IRS Estimated tax payment – due soon

Submitted by Dee Totten on Wed, 2023-09-06 20:55

Hello – hope you can answer these 2 IRS estimated tax question – 1) I have several accounts (one with no available online interest info) that only send quarterly statements on interest earned: am I supposed to include the guesstimate for each month’s earnings to include in my estimated tax payment, or is it based on when I receive the actual statement (next one posts Sept. 30, which $ would go on the final estimated Jan. tax payment?

2). Same question – have an account that only pays CD interest, 2 times per year- so that’s what I’m counting, when actually money posts to account. Yes?

Thank you……
DT



Submitted by Alan - IRA critic on Wed, 2023-09-06 21:22

  • Most people pay equal quarterly estimates based on the prior year’s tax liability, or 110% of that tax liability for higher income taxpayers. Even if you owe more next April, you will not be penalized. The month income posts to your account only matters if you are using the annualized income installment method but few people use that because you must file a long complex Form, 2210 AI and break down your income and deductions into the applicable quarter. Another alternative is withholding from wages, retirement plan distributions, pensions or annuity distributions. If you use withholding, you can usually avoid quarterly estimates, and withholding has the advantage of being treated as being paid equally throughout the year even if the withholding comes late in the year.

Submitted by Dee Totten on Thu, 2023-09-07 00:24

With the sudden great CD and money market rates I am suddenly mid year getting way more interest that I will owe some taxes on, so should I guesstimate by month even though my statement will lag behind and online only shows it quarterly?  I do have withholding on pensions, & SS, but have no wages.  I think you are saying if I pay at 110% of last years taxes at least, no penalty.  But I should pay some tax estimate 3+4 th qtr.  Please advise on how to account for the $ increase as stated above.   Thx.  

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