I’m curious - does anyone NOT pay their taxes quarterly? But just when it’s time to file? Note: this question is not directed for someone who gets “employee” income on a W-2 only.
Why would you want to do this?
If you are a sophisticated investor, that 7% penalty or whatever the IRS charges you is a joke – as you can earn 25% to 100% or more on your money during year. I do this all the time (primarily with non-real estate investments, though I do have some of those).
Has anyone ever done this before? Could this cause problems with the IRS? They’d get their late fees / penalties, so I don’t see why they would care much.
I file quarterly estimated taxes both for the federal and state income tax. I have not always paid each installment “on time”, although the full amount of my estimated payments have been made by Jan 15. I remember one year that I paid my September installment in October and there did not seem to be any late penalty assessed on my tax return. One year I underpaid the April and June payments, then made up the difference with overpayments in September and January. Again, no late penalties were assessed.
It seems that the IRS is more concerned with underpayment penalties when you file your tax return, than they are about when you actually made the estimated payments. I bet you could skip the April and June payments entirely, then pay your entire estimated annual taxes in two installments (September and January) and still have no repercussions.
The IRS tries to make it as easy as possible for you to send in your quarterly estimated payments. They even send me preprinted payment vouchers for my next years estimated payments. All I have to do is fill in the amount and enclose a check.
If you don’t trust the mail, you can make your payments electronically at Official Payments Corp and charge the payment to your credit card. If you do this, you don’t even send in the payment voucher.