By William Perez. Tax Planning: U.S. Expert
William Perez has worked as a tax professional since 2004. He earned the enrolled agent designation by passing a comprehensive examination on federal taxes and maintains his credential by taking continuing education classes.
The second estimated tax payment for the year 2015 is due by June 15, 2015. Here are some tips to help make the most of it.
Tax software is capable of using data in the 2014 tax return to calculate estimated payments for 2015. Some software even has the ability to build scenarios so that income or deductions can be adjusted up or down.
Using such a planning utility helps make the calculations for estimated payments more accurate.
2. Consider doubling up on the second payment if you missed the first estimated tax.
Sometimes, a person will skip paying the first estimated tax payment, which is due on April 15, simply because April 15th is also the day for making the final payment for the previous year. That's understandable. To catch up on one's 2015 payments, pay a little extra on the second payment. This helps avoid any tax surprises -- and cash crunch situations -- next April.
If the 2014 tax return is not yet finished, at least start figuring out what the estimated tax bill for 2015 will be. That way one can start paying ahead, even while last year's return is being finalized.
Made a big stock sale? Or perhaps you sold your house, or a lot of restricted stock vested? Big financial events are a prime time to revisit one's tax calculations with an eye to figuring out if any estimated tax needs to be paid.
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4. Keep an eye on the thresholds that trigger the estimated tax penalty.
This penalty can be avoided if, among other things, a person has "paid at least 90% of the tax for the current year
, or 100% of the tax shown on the return for the prior year , whichever is smaller" (IRS.gov, "Estimated Taxes .")
5. The next payment deadline is September 15, 2015.
Plan for that eventuality now. For example, consider setting aside some estimated tax every time a client pays an invoice.
Check out these apps for calculating federal taxes:
· Tax Calculator by TaxSlayer. This nice-looking app can calculate federal income tax on wages, business profits, unemployment benefits, and Social Security benefits. And it handles common deductions for home and property, charity donations, education, and IRA contributions. Check it out via the Apple App Store. Google Play. or their Web app .
· TaxCaster by Intuit. This app also calculates federal tax. You can put into your income and other financial figures by sliding a button, or you can tap the little grey arrow (>) to reveal a place where you can type in actual numbers. Check it out via the Apple App Store. Google Play. or their Web app .
· TaxMode by Sawhney Systems. This is the most thorough of all the apps with its support for both simple and "full" data input. Free trial. Check it out via the Apple App Store. Google Play. or their Web app .
· Total Tax Insights by the American Institute of CPAs. This Web-only app calculates federal and state income taxes, and even estimates property tax, cell phone taxes, and other state and local taxes. Plus you can compare your tax calculations against two additional locations, which could be a handy tool if you're thinking of moving. Check out their Web app .
To learn more about Estimated Taxes:
You can pay estimated tax either through:
· EFTPS.gov. the Electronic Federal Tax Payment System (registration required), or
· Mailing a check along with Form 1040-ES. (Here's the most current mailing addresses for Form 1040-ES .)