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Estimated payments
I am so confused about how to pay estimated tax payments. I have two independent contractor jobs so I am going to make a lump payment. I hope that's OK. All I know is the due dates:
For the Period Due Date January 1-March 31 April 16 April 1-May 31 June 15 June 1-August 31 September 17 September 1-December 31 January 15, 2008
I am going to do this and I hope someone will alert me within this thread or PM if I am doing something wrong:
I am going to keep track of all my earnings for Jan-March. I am going to fill out a 1040-ES form for the federal goverment and a Form-ESV Payment Voucher for Oregon. When it says estimated income for 2007, what should I write? Should I take the amount of income I've made from Jan-March and multiply it by four? If you send in more estimated tax than you really need to pay throughout the year, does the IRS refund it to you?
If there is anything else I am missing, please let me know.
Thanks always.
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Re: Estimated payments
when I estimate my income for a year, I do it by using last year's earnings plus 10%. Then I divide that by 4 and pay the same amount every quarter. I haven't overpaid this way, but it's one method the IRS approves of so you don't get penalties and interest. I know there are others.
And if I ever did overpay, it wouldn't be worth it to get a refund since you have to pay your 1Q est taxes anyway. So let's say you file your 2006 return on April 15th and get $2000 back. But you owe over $2000 on the same day anyway....so now you would just credit your 1Q2007 estimated payment your "refund".
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Re: Estimated payments
How do you credit that as a refund? Thank you so much emily!!
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Re: Estimated payments
When you file your taxes and you get a return, there is a part on the form (the very end) that asks if you want to get a check for the refund or credit it towards next year. Just choose appropriately.