Estimated Tax Voucher Federal
November 26th, 2007
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Question: why are my estimated federal taxes equal to my to total liability for 2008?
I owe 1690 dollars to fed but turbo ax creates 4 vouchers for 1693 – I thought it would be 1690 divided by 4? Seems strange- any advice
Answer: If it's kicking out 4 vouchers for $1,693 then your tax liability must be $6,772. Don't confuse your tax liability with what you have to pay when you file! They are usually MUCH different!
Most tax pros and most tax software will kick out estimated payment vouchers for an amout equal to your tax liability automatically. That way you avoid any chance of penalties or interest next year since you will have paid in 100% of the PRIOR year's tax liability, one of the 3 Safe Harbor exceptions to the penalties and interest for underpayment of estimtated taxes.
This also operates on the assumption that you'll probably earn about the same amount in the next year as you did the prior year. If your income should jump upwards more than expected you may wish to bump up the amounts of your payments or just salt the money away for filing time, since you won't have to pay any underpayment penalties.
What's New in Tax Season 2010
FORT LAUDERDALE, Fla. - Last year, millions of Americans received unemployment checks. Which makes for millions of people with some tax-free income. Congress made the first $2,400 of unemployment benefits exempt from federal income tax for last year.
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