This situation often involves someone who pays $10,000 in estimated tax while keeping a balance of $100,000 in their checking account that earns less than 1% interest. Give them one voucher to pay all of their estimated tax in April, and tell them not to worry about it for the rest of the year. As an alternative, what income do they have that can be a source for withholding? Probably Social Security, and although I don't recommend it because it's too difficult to change, that could eliminate the need for estimated tax payments.
My client owes $26,500 per quarter in federal taxes, 8K state tax quarterlies.
In the irs.gov payment link, is it possible to schedule the quarterly payments ahead of time for the entire year?
He forgot the 2nd quarter, and is pissed about the minimal penalty for doing it late.
BTW, I hand out social security withholding vouchers by the dozens. It's super easy to arrange the federal withholding for elderly clients whose income is largely from investments. This particular client has a big IIRMA deduction, I will check to see how much is left for federal withholding, but out of the 100K annual tax, this will not make much of a dent. On the other hand, he will feel less bad in writing those big checks. Of course, he detests the govt.
And no pension or IRA income? He must have a lot of investment income, so maybe he should consider this new product:
"While dividends have long been a defining feature of stock investing — a sign of corporate discipline and investor reward — Roundhill Investments plans to launch the S&P 500 No Dividend Target exchange-traded fund on July 10 with the ticker XDIV. Its ambition is simple but strategic: track the performance of the famous benchmark while dodging its payouts. The fund will sell holdings just before their dividend dates — steering income away from ETF shareholders and, in the process, away from their tax bills." (From Bloomberg)
It would help lower his Medicare premiums, too. Bottom line is that if he can't remember to pay his taxes, he's probably not in the best mental condition to manage his investments either.
Or maybe much of his income is from mutual funds, with high CGDs in December, and doing the 2210 with actual income can reduce the penalty.
I encourage clients to freeze their Social Security online accounts, because it's too easy to hack them. I suppose paper filing of the W-4V is still allowed, if anyone is left at the local office to process it.
This is what Google AI says about setting up automatic ES payments, so it's probably wrong:
The IRS offers an electronic system that allows you to set up automatic withdrawals for your quarterly estimated taxes.
Using the Electronic Federal Tax Payment System (EFTPS):
Establish an account with the IRS on the EFTPS website.
Schedule automatic withdrawals for your quarterly estimated taxes, including the amounts and dates.
EFTPS offers convenience by allowing scheduling payments up to a year in advance and providing access 24/7. You can also modify or cancel scheduled payments and view your payment history.
EFTPS stopped helping elderly clients when a year ago it began to require verification of identity which is over my head (I'm old too). They still prefer mailing vouchers with checks. Also for Social Security withholding I have them mail the VA-4 voucher to our local rural Virginia office that has been (for now) super efficient. Year 2024 was very big in investment taxable income with huge surprises to the elderly wealthy investment class. Once we die out, online payments will be familiar to the younger generation, but with hacking worries. My client's income is all from an inherited portfolio and widower's social security benefits, nothing else, so estimated payments are his scourge.
You'll have to learn that "verification of identity" routine with a third-party political donor government contractor, in order to renew your PTIN, right?
Today I signed up for ID.me. What an ordeal. I couldn't do it, nor could a dear friend. I had to hire a techie to verify me by uploading my driver license and then uploading a video of my face. I am so discouraged, I may have to close my business because the online hoops are above my skill set. I am good at preparing taxes, with a large clientele, it seems a shame to give up. I need the ID.me to get a PTIN -- is it available yet? I fear I will forget how to use the ID.me by then (:
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