Scared you, didn't I? Well, some of you might indeed need to file tax paperwork today. Read on.
Do you run your own business, either full-time or a small one on the side to boost your wage income? What about investments? Do you get regular payments from your mutual fund or stock accounts?
Maybe you get alimony (even a paltry amount) from that worthless ex. Or, on a happier note, one of those scratch-off tickets from the corner market finally paid off.
If any of these situations apply to you, you might need to make estimated tax payments. These four-times-a-year filings of Form 1040-ES are the IRS’s way of making sure it gets its cut of your money without having to wait until April.
And today is the deadline for 2005’s final estimated payment.
Jan. 15 is usually the due date for this fourth payment, collected on income earned in the latter part of the previous year. But two calendar factors allowed you to hang onto to your cash a tiny bit longer.
First, this year the 15th fell on Sunday, so the due date got pushed back to the next business day. That normally would be the following Monday, but this year that next Monday, yesterday, was Dr. King’s day, meaning it was not a business day for the U.S. government.
So today is the deadline for this annoying extra tax chore.
Who came up with this great idea? The same folks who devised payroll taxes. Essentially, the estimated tax system is the IRS’s answer to income that the agency doesn’t get its hands on first a la withholding.
What you’re supposed to do is estimate as closely as possible the untaxed income you expect during the year, divide it by four and then send in those four allotments every quarter. Of course, it is the government, so the payment schedule doesn’t use the Gregorian calendar quarters that most of us typically use. Hey, if you’re on your own schedule, who am I to judge? Some of the methods described here look very interesting … but I digress, and tax time is ticking.
For 1040-ES purposes you will need to know these dates: April 15 (yep, when your regular 1040 is due), June 15, Sept. 15 and Jan. 15. Either that or have a good astronomical measurement argument to sway any auditor. You see, the IRS can charge you penalties and interest if you end up owing too much when you do file your annual return, or even if you underestimated and didn’t pay enough in each quarter.
There is one way to get out of filing this final annual estimated payment: Complete your 2005 return and get it, and any due taxes, en route to Uncle Sam by Jan. 31. But be sure that you can meet that end-of-month deadline. If you skip the fourth estimated payment and then decide “What the heck; I’ll wait until April to file my regular 1040,” get ready to hear about it from the IRS.
You can read all about filing estimated taxes, along with some other options for dealing with them, in this story.
TWO-FOR-TUESDAY TAX TIPS: The tax tip feature took MLK Day off, so today you get two tips for your tax pleasure. First, here’s a look at ways to e-pay your taxes. You can use this method to meet your annual and quarterly filing bills.
And for tax tip number two, regardless of whether you file just once a year or five times, you most definitely need to make sure that all the Social Security numbers on your 1040 or 1040-ES forms are correct. Miss one, or enter it incorrectly, and it could cost you.