Safe harbors for corporate
estimated taxes or R&D expenditures would make the law simpler, he stated.
Americans participate in a pay-as-you-go tax system through withholding and
estimated taxes.
With this change, taxpayers will be required to use the IRS's Electronic Federal Tax Payment System (EFTPS) to make federal tax deposits of various withheld and
estimated taxes.
For tax years beginning in 2009, in computing
estimated taxes, an individual uses 90% of the tax shown on the individual's return for the preceding year instead of the 100% required by Sec.
Occasionally we list multiple extra items--such as financial planning, a yearend tax planning meeting, additional services in connection with the sale of rental property, researching cost basis of mutual funds sold, calculation of S corporation basis, preparation of the next year's
estimated taxes, prior years' income annualization for estimated tax penalty reduction, alternative minimum tax credit calculation or any of a few dozen other items.
If
estimated taxes are overpaid, the taxpayer has made an interest-free loan to the government.
Current law effectively requires large corporations to overpay their
estimated taxes, without the benefit of interest, or in order to avoid an underpayment penalty under section 6655 of the Code.
It incorporates about $100 million of proposed tax adjustments and redirections, including $30 million from quarterly filing of
estimated taxes, nearly $40 million from redirection of sales taxes from highway and water, and $10 million inheritance tax decoupling.
This is usually done for clients with lower income than the previous year who do not (and should not) want to pay
estimated taxes based on the protective prior-year tax.
The provision provides that no penalties will be assessed for underpayment of
estimated taxes owed prior to April 15, 2003, if the underpayment is due to this change in the law.
The Supreme Court disagreed and held that IRC section 6513(b) required that the withholding and
estimated taxes be considered paid on April 15, 1989, which was outside the lookback period.
In addition to filing a separate corporate tax return, a FSC must also separately pay
estimated taxes.
