Saturday, January 06, 2007

quarterly estimated tax payment time

Okay Jan 15th is the last day to make a quarterly estimated tax payment for 2006 without a penalty. Last year I ran our numbers off the cuff, and determined we would owe about $5k to everyone, so what I did was I paid Federal, MA, and CA about $1500 each and hope we'd come in close. We did, we got a small $200 refund from CA and MA, and we owed another $1400 to the Federal. What we probably should have done was estimated payments through the year, but it was too difficult to follow.

This year, I've already run our numbers and because I'm stupid, we'll get a huge refund of I think $4k or more back. Yeah, I know, what the heck? Well the issue came with DH's bonus in December, they didn't tell us they would withhold way more than our bracket of 28%, they held back 40%. So we budgeted to pay the right amount but they overheld. We should have been paying less all year.

Hopefully this coming year we'll be more spot on. These past two years have been hard with the move, buying/selling homes, learning about bonuses, etc. The beauty of having the estimated payment is you can calculate roughly what you think you owe now and pay if you need and you don't have to worry about it the rest of the year. Of course this doesn't work if you don't have the money.

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