Estimated tax payments
I recently completed my 2004 tax return and owe the IRS about $2,400. Upon completing my return utilizing TurboTax, it seems to indicate that I must make estimated quarterly tax payments of $600 each in 2005. Normally I get a refund each year the reason I owe this time is that I had substantial interest income from a CD that matured in December 2004. Now this interest income was a one time deal, and will not happen again in 2005.
I called the IRS helpline and they asked me a bunch of questions, and then told me I DO have to make estimated tax payments.
They best I can calculate is that if I make these $600 x 4 payments, in addition to the federal withholding from my paycheck, I�m going to get this money back as a refund when I do my 2005 taxes in 2006� so what would be the point?
Thank you
1 Answer from Attorneys
Re: Estimated tax payments
As long as you believe you will not have the same amount of tax next year, you do NOT have to make estimated payments throughout the year. In order to avoid a penalty, however, you should be sure that the withholding being taken from your paycheck covers what you will be owing.
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