For those paying their income tax through quarterly estimates the 2nd estimate is due June 15th. Usually during the rush of tax season you had to decide what to base your 2014 estimates on. You would have considered the safe harbors and chosen the one that best fits your circumstances at the time.
Now is a good time to consider if you have made a good choice on what to pay.
Taxpayers pay estimated taxes to avoid the underpayment of estimated tax penalty. The Internal Revenue Service requires taxpayers to pay the lesser of 110% of the prior year tax or 90% of the current year tax. Generally it is easier to calculate 110% of your 2013 than to estimate 2014 income.
Now that five months of the year have passed you may have a clearer picture of your income for the year. If there has been a significant change from what you used for the first quarter estimate a re-calculation now could either save you cash flow (if you will owe less) or give you an opportunity to start paying that April 15, 2015 liability now if income is higher.
If you think there is a change in your income and would like to explore with us the possibility of a change in your estimates, please take advantage of our free ½ hour consultation.