do+you+pay+est.+taxes%3F

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MrLandlord Q & A
do you pay est. taxes? (by BillW [NJ]) Apr 13, 2024 9:56 AM
       (by plenty [MO]) Apr 13, 2024 10:18 AM
       (by MikeA [TX]) Apr 13, 2024 10:20 AM
       (by Jim [CA]) Apr 13, 2024 10:21 AM
       (by WMH [NC]) Apr 13, 2024 11:29 AM
       (by BillW [NJ]) Apr 13, 2024 12:16 PM
       (by Wilma [PA]) Apr 13, 2024 12:30 PM
       (by jonny [NY]) Apr 13, 2024 1:24 PM
       (by BillW [NJ]) Apr 13, 2024 3:54 PM
       (by MMIT [VA]) Apr 13, 2024 6:27 PM
       (by Busy [WI]) Apr 13, 2024 7:17 PM
       (by BillW [NJ]) Apr 13, 2024 8:07 PM
       (by BillW [NJ]) Apr 13, 2024 8:22 PM
       (by wmh [NC]) Apr 13, 2024 9:02 PM
       (by BillW [NJ]) Apr 13, 2024 9:52 PM
       (by Pat [VA]) Apr 14, 2024 9:50 AM
       (by BillW [NJ]) Apr 14, 2024 4:22 PM
       (by Ray-N-Pa [PA]) Apr 14, 2024 8:28 PM
       (by Phil [OR]) Apr 14, 2024 11:38 PM
       (by John... [MI]) Apr 15, 2024 8:32 AM

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do you pay est. taxes? (by BillW [NJ]) Apr 13, 2024 9:56 AM
Message:

Do you pay estimated taxes on your rental income? Why or why not? In Ray-N-Pa's post, a few persons talk about having to pay large amounts to the IRS in April, but I don't understand why they would, if they were paying estimated taxes, as I do. What am I missing here? I pay estimated taxes because TurboTax says I should. I didn't use to pay estimated taxes, but I think I paid a penalty for that, along with having to write a big check in April. Love to hear your thoughts. Thanks! -Bill

--173.63.xxx.xx




do you pay est. taxes? (by plenty [MO]) Apr 13, 2024 10:18 AM
Message:

Because my rental income increased significantly last year and my quarterly payout was based on estimated taxes for this year but every property stayed rented and rents increased significantly. So Made more money. Not complaining! --172.59.xxx.xx




do you pay est. taxes? (by MikeA [TX]) Apr 13, 2024 10:20 AM
Message:

Yes, I pay estimated taxes. The CPA gives me the number to pay when she gives me the bad news for the current year. That said, I've also had big tax bill years because of property sales (without a 1031) which generated a huge capital gains bill.

If you don't buy or sell property regularly, taxes can be estimated pretty well, but when you hit the lottery (or sell a property after holding it a while) you won't like your tax bill that year. --209.205.xxx.xx




do you pay est. taxes? (by Jim [CA]) Apr 13, 2024 10:21 AM
Message:

I have been paying estimated taxes for years. I usually have a credit for the tax year and apply that that credit towards the next tax year’s estimated. After having been audited in 72,73 and 74 because I was using a bookkeeper not a CPA I’m anal about taxes. --146.70.xxx.xx




do you pay est. taxes? (by WMH [NC]) Apr 13, 2024 11:29 AM
Message:

We pay estimated taxes but depending on what happens in our rental lives it's not always on the nose. I've had to write some big checks before. It's not like a W-2 job where you pretty much KNOW what you make.

And even if we know the INCOME, we don't always know the TAXABLE income- depends on expenses that year of course. --173.28.xx.xxx




do you pay est. taxes? (by BillW [NJ]) Apr 13, 2024 12:16 PM
Message:

Thanks! Sounds like you all pay estimated taxes. And I understand, rent may not change much, but expenses can and if something is sold, then capital gains taxes --173.63.xxx.xx




do you pay est. taxes? (by Wilma [PA]) Apr 13, 2024 12:30 PM
Message:

Always. I make a game out of trying to see how close I get. I also avoid penalties by estimating. --108.52.xxx.xxx




do you pay est. taxes? (by jonny [NY]) Apr 13, 2024 1:24 PM
Message:

Yes but you can always pay a higher amount (or lower amount) ... just because the estimated taxes are $xxx doesn't mean you HAVE to pay that amount.

So if you end up realizing that you may pay more... just take that guess and put it in.

I use to just pay what they told me to do but at the end of the year if you end up owing more than $1k you pay for that mistake on top of what you owe. It's complete BS but that's what it is. --69.201.xx.xxx




do you pay est. taxes? (by BillW [NJ]) Apr 13, 2024 3:54 PM
Message:

I read below was from the irs website. So it seems Wilma, to really win the game, you'd pay the smaller of the two below. However, I guess if you invest the money and do better than the 8% (or whatever it is) penalty, you can win that way too.

"In general, you may owe the penalty for 2023 if the total of your withholding and timely estimated tax payments didn't equal at least the smaller of:

1/ 90% of your 2023 tax, or

2/ 100% of your 2022 tax. Your 2022 tax return must cover a 12-month period.

Let's say 1/ is smaller. To use some round number. Let's assume your 2023 tax is 100K. So, 90% of that would be 90K. Now assume you paid 85k during the year. You will the penalty on the difference (90k - 85k = 5k). The penalty is computed on a per quarter basis when the tax is due." --173.63.xxx.xx




do you pay est. taxes? (by MMIT [VA]) Apr 13, 2024 6:27 PM
Message:

We do estimated quarterly tax payments based on the past year’s taxes.

In late December, once rents are all collected and all rental bills have been paid, we run a year end report for the rentals.

We know our social security income, and we estimate our stock income.

We can then do an estimated tax return.

We adjust our 4th quarter tax payment based on our estimated return.

But, we also look at our tax bracket and our cash on hand. That lets us know how much of a Roth conversion we can do that year. This happens between Christmas and New Year’s Eve.

Our tax bracket is lower than where our kids are, so, it is cheaper for us to pay tax on the IRAs than have the kids pay tax on the inherited IRAs. --71.62.xx.xx




do you pay est. taxes? (by Busy [WI]) Apr 13, 2024 7:17 PM
Message:

Wilma, I love that!

I have paid them, though not specifically by the quarterly dates. With just a small number of properties, things can fluctuate more dramatically, so I'm kinda spitballing it. Closest to perfect we ever got is one year, we had to pay $1 in penalties, plus the tax owed. My husband would rather get large refunds, I'd prefer to pay with the return ( though not the penalty) so after we had the dollar penalty, he changed his withholding at work. No fun! --72.135.xxx.xx




do you pay est. taxes? (by BillW [NJ]) Apr 13, 2024 8:07 PM
Message:

Wilma, I just re-read what I wrote and my apologies. Me saying: "So it seems Wilma, to really win the game, you'd pay the smaller of the two below" sounds a bit know-it-all or preachy to me. Your game was just fine and you don't need me to tell you how to play it :-) --173.63.xxx.xx




do you pay est. taxes? (by BillW [NJ]) Apr 13, 2024 8:22 PM
Message:

MMIT, interesting, what you said about “Our tax bracket is lower than where our kids are, so, it is cheaper for us to pay tax on the IRAs than have the kids pay tax on the inherited IRAs.” Something I hadn’t thought about but makes sense. And good tip on “look at our tax bracket and our cash on hand. That lets us know how much of a Roth conversion we can do that year” I got figure out how to do those Roth conversion. Right now I have other IRA’s so the pro-rata rules apply.

Busy, I love that term, “spitballing it”(hadn't heard it before)! They never were that accurate were they?

--173.63.xxx.xx




do you pay est. taxes? (by wmh [NC]) Apr 13, 2024 9:02 PM
Message:

So I paid estimated tax for 2023 in January 2024 of more than 100% of 2022. So technically I don't need to pay more right now, right? Because I have no idea what 90% of 2023 will be unless we actually do our taxes...and we have filed for an extension so won't be actually doing them until September.

But am I supposed to start paying estimated tax for 2024?

So confused right now. I hate taxes. --173.28.xx.xxx




do you pay est. taxes? (by BillW [NJ]) Apr 13, 2024 9:52 PM
Message:

As I understand it, if you paid 100% of 2022 taxes in estimated taxes, then you will avoid a penalty, however if you made more in 2023 than in 2022 and have a higher taxes bill you may need to pay the IRS more, depending on how much you paid in estimated taxes. --173.63.xxx.xx




do you pay est. taxes? (by Pat [VA]) Apr 14, 2024 9:50 AM
Message:

Our return is always around 60 pages. We definitely pay quarterly. Our CPA is real good and prepares the forms for us. We did have to pay in a small amount this year, which is unusual. We donated 5 figures to the Christian school our grandkids attend to help them build a high school, so that should help for this year. Just have 8 grades for now. --216.126.xx.xxx




do you pay est. taxes? (by BillW [NJ]) Apr 14, 2024 4:22 PM
Message:

Your grandkids are fortunate to have such generous grandparents! --173.63.xxx.xx




do you pay est. taxes? (by Ray-N-Pa [PA]) Apr 14, 2024 8:28 PM
Message:

Does anyone here know exactly how many places they will be selling or buying in any given year? If you do, I believe you are not growing your business to scale.

As for me, I got whacked hard when I did 12 transactions in a year. I have done more before and I have also done less, but the issue became did I fully complete a 1031 exchange?

There are some specific rules you have to follow in a 1031 exchange like the 200% rule in IDing properties. If you don't buy those properties, well then you will be doing a fractional 1031. You then get stuck with a smaller tax bill than if you did nothing.

So for example if you were going to have a tax bill of $20,000 on a single transaction, you bought only one of properties you IDed that account for 70% of the amount you sold and you didn't buy any other properties to expand the business, you would be tagged $6,000 tax bill in that transaction.

That happens. No big deal on a small deal.

Start doing transactions that have more zeros and the unexpected liability grows. To make things even worse, our tax structure is progressive. The more you make, the higher the percentage you pay on what you make. You can get your rear end handed to you quickly if you can't find replacement properties during the ID period.

I pay my estimated taxes. Do I know what tax bracket I'll be in any given year? Nope not at all. I know what one I want to be in but a five figure monthly net income doesn't support that bracket.

Where now is a great time to sell, it is a challenging time to get replacement properties. Very do able, but challenging just the same. --24.101.xxx.xxx




do you pay est. taxes? (by Phil [OR]) Apr 14, 2024 11:38 PM
Message:

Yes. It hurts worse if you don't and have to pay interest and penelaty.

--76.138.xxx.xxx




do you pay est. taxes? (by John... [MI]) Apr 15, 2024 8:32 AM
Message:

I do not pay (and have never paid) quarterly. My CPA does the normal stuff in April. Sometimes I owe more; sometimes I get a small refund. I write a check and I'm done with it.

That being said, after 17+ years of being a landlord, we finally sold our first property in December. (Which I'm writing the tax check for today.)

-John...

--107.181.xxx.x



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