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Quarterly Tax Payments ...

Discussion in 'Business Operations' started by Richard Martin, Mar 26, 2002.

  1. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    When Do You Make Them?

    Although you are supposed to make the payments every 3 months when do you actually make the payments?

    Since I don't really make any money in the first 3 months of the year I wait until around June to make the first one and then make the other three in the next three months. I have been doing this for a few years now and I haven't heard anything from the IRS or been penalized for making late payments.

    I realize this should be in the Business Forum but I wanted to get maximum feedback and a lot of people never look in the Business Forum.
  2. osc

    osc LawnSite Senior Member
    Posts: 502

    You should have a coupon booklet that tells you when to mail in the payments for estimated federal income tax. If you get an audit you will pay a penalty for missing that first payment even if you catch up later in the year. State est. income tax is done the same way. An accountant can set you up with everything you need and do your yearly taxes for around $350.00 or less depending on if Inc. or sole pro. They can also save you money with early tax planning. My yearly accountant fees are between $1,200 and $1,500 which sounds like a bundle but she is worth every penny as mine are very complicated.
  3. Jerrys Lawn Service

    Jerrys Lawn Service LawnSite Member
    Posts: 155

    Richard, all payments are to be postmarked by 3/15, 6/15, 9/15,
    1/15. We also do the same as your doing unless we make a good bit in snow removal then we'll claim that money, other than that we wait till 2nd quarter is up then make a payment.

  4. My sister in law is our cpa and she makes sure we get the estimated taxes in on time every quarter.
    Im not saying what you are doing is wrong ,i dont know all i know is my sister in law says get in on time every quarter.
  5. Mark

    Mark LawnSite Senior Member
    Posts: 723

    I usually pay quarterly but last yr i just wrote the IRS a check after my CPA figured the amount owed.I used to work part time in the winter for a carpet layer a good friend of mine who has had his business for close to thirty yrs,and he always pays at the end of the yr. Marks Mowing Service
  6. 1MajorTom

    1MajorTom Senior Moderator
    Posts: 6,074

    I did move this post over to the biz forum because it got reported for being in the wrong forum. The member that reported this thread is right when he said that it is hard to keep up with all the new threads each day and having them in the right forums helps him.

    P.S Richard: You'll still get maximum views because I left a redirect on this thread so everyone viewing the commerical forum will still see this. ;)
  7. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    Apparently the redirect didn't work. Whatever.
  8. bruces

    bruces LawnSite Senior Member
    Posts: 648

    The due date for the first estimate is actually 4/15, not 3/15.

    One of the exceptions to penalty for underpayment that the IRS allows is based on annualized income for the first 3 months, 5 months and 8 months, respectively. This is a pay as you earn concept, in other words, for the first estimate, you pay based on what you earned through March 31, for the second, through May 31, and for the third, through August 31. The final estimate is the balance. This is known as the annualized income exception to penalty figured on form 2210.

    Ask your tax preparer about this. The easiest method is setting up estimates equally during the year, but the annualized method is able to match tax liabilty and cash flow closer.

    To really compute tax liability this way, you need somewhat accurate financial records so that you can really determine what your profits are at these points through the year.

    You might want to have your CPA set up estimates higher for June15 and Sept 15 and lower for January and April.


    Back to your original question, since you don't make any money in the first 3 months, you are probably ok. To prove it, your tax preparer should really fill out the 2210 using the annualized income exception. The underpayment penalty is one of the few things that the IRS hasn't got a real good handle on tracking if the total tax is paid.
  9. Like Bruce said. I file form 2210. My start up expenses are high and income low in the 1st quarter so I prefer the annualized method. It keeps me from paying in taxes before they are owed. Its a bit more work, but to me worth the effort.
  10. Maybe I'm crazy but I wait until the last minute to pay my taxes. I hate the idea of those irs jerks using my money. I keep it as long as I can. Maybe I'm stupid to pay the penalties but I feel better!

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