I'm making less this year than last year. If my total taxes for 2006 is $40,000, should I pay less or should I pay the same for 2007? For example, should I pay 4 payments of $10,000? .... even though I know I'm making less this year?
I've always paid annually, but I have to pay quarterly this year. I hate taxes!!! argh!!!!!!!!!!!
2007-04-16 05:03:33 · 3 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
If you are certain that your 2007 tax will be lower, you can lower your quarterly estimates as well.
Pub. 505 (linked below) helps explain how to calculate your estimated taxes for the current year, and the 1040-ES link below has a worksheet you can use. Good luck! :-)
2007-04-16 05:12:16 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Your quarterly payments are determined by what you expect to owe THIS year. If you're expecting to make just a little less, then making the $10K payments might be a good idea, but if you expect to owe a LOT less, then figure approximately what you expect your tax to be, and pay 1/4 of that each quarter.
2007-04-16 12:38:54 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
Estimated taxes are determined by prior year. It is just something to base it on. If you know you will not make as much then you can adjust your estimated payments accordingly. Estimated payments are voluntary. If you underpay too much though, you will be charged an underpayment penalty.
2007-04-16 12:13:40 · answer #3 · answered by Justthefacts 2 · 0⤊ 1⤋