Estimated tax vouchers for extended returns

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#1
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300
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26-Apr-2022 10:00pm
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Los Angeles
Hi,

How do you calculate estimated tax voucher amounts for clients who extend?

e.g. we normally have our clients who extend make an overpayment with their 4868, which will go towards the 4/15 estimated tax payment. But now we are closing in on 6/15 and we still don't have their prior year information, so don't know what amount would reach the 100/110% safe harbor.

Any tips for this predicament? do you just play it safe and take a conservative guess?

The last filed tax year in this instance is 2020, which had no RMD requirement, so I can't really use those amounts without making some adjustments.

Any help is appreciated, this must be a common problem... :(
 

#2
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North Carolina
If I have an "idea" of what the coming year income will be based on the numbers used for the extension, I go with that but advise them it is my best guess based on what I have to date. Others, I just send them blank estimates and tell them to pay what they would like, as I have no information to calculate anything.
 

#3
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4-Mar-2018 9:03pm
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The Office
I'm of the opinion that this is one area that we shouldn't care more than the client cares.

If we don't have the prior year information yet to prep the outstanding return, how on earth are we able to know what the client should pay for current year quarterlies? Their guess is as good as ours. Probably better to be honest.

I have automatic eblasts that remind all of my estimate-paying clients about each upcoming deadline. The procrastinators...those that finally get me their docs 30 days before the extended deadline... could reach out if they were worried. They never do. Regardless, they get the eblast and can't be bothered to make a payment. Penalties and interest is the tradeoff. What more can we do other than that? Act as a personal assistant for the client?
 

#4
Joan TB  
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Texas
There are few clients that I spend much time on calculating their ES pmts. I find that having the client estimate "what they want to pay" works as good as anything.

Agree with Seaside and Man.
 

#5
ATSMAN  
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Location:
MA
I do the 100/110% formula based on prior year information and an adjustment generally upwards. After the 10/15 deadline all these returns are recalculated and the last quarter will see an adjustment.

I do give my clients a heads up of underpayment penalties.
 

#6
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300
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Location:
Los Angeles
Okay, well that does seem very reasonable to me. i.e. basically, it is the clients fault for not providing the necessary information.

On the other hand, I would prefer more of my clients extend their tax returns... to take the pressure off the 4/15 deadline. But, I don't think they will be all that jazzed about it when they get estimated tax penalties.

I was going to do the 100/110% formula based on 2020, but then started to fret about how 2020 was a "little bit special".... i.e. a lot of well off people paid very little tax that year.
 


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