Time to Start Thinking About 3rd Quarter Estimated Taxes
August is almost over and another taxable quarter draws to an end. By September 15, 2013, your quarterly estimated tax payment for the third quarter will be due. For those who are required to pay (or choose to pay) quarterly estimated taxes and who earn a relatively consistent income, making a quarterly estimated payment is as simple as detaching the proper 1040ES payment voucher, attaching an acceptable form of payment and mailing the combo to the IRS.
If you have extreme fluctuations in income or you’re not as ‘on top of budgeting’ as you maybe could be, it never seems quite as simple as either detaching a payment voucher from the Form 1040ES either you or your professional tax preparer filled out al fin of the first quarter. Fortunately, though, whether your obstacle is budgeting or time restraints, there is still plenty of time to make sure you can get your quarterly estimated tax payment to the IRS on time or at least close enough to avoid penalties.
What to Consider
Remember: If you’ve had extreme fluctuations in income, you’ve also probably had relative fluctuations in spending. Whether you’re preparing your own estimated tax return or you plan to rely on an international tax expert, you are going to need a complete balance sheet including all accounts payable and accounts receivable data for the entire quarter. It is only an estimated return, however, so if you happen to include a bit more income than the amount of expenses you deduct, that only increases your odds of having overpaid at the end of the taxable year. Staying as accurate and consistent as possible are great habits, though, to avoid giving the IRS the impression of having accumulated a suspicious amount of deductions in the last quarter by comparison to previous quarters in the year; so if you want to take every precaution to avoid and IRS audit, you’re best chance is to just include all relevant financial information as it becomes updated.
For those who are always facing a budget emergency at tax time, perhaps a consistent monthly payment schedule into a high interest account would help you ‘stash’ your tax liability so it’s not only ready to go when you’re ready to send it, but also so it begins to generate an income – however small or slowly. You can set up automatic required payments in accounts payable, and – if possible – try to transfer an additional amount of funds every month aside from your estimated liability. This will help you build a base in your high interest account that will allow you to earn an even higher and more consistent rate of interest.