Did You Pay Estimated Taxes?

January 18, 2011 by  
Filed under Taxes

I mailed a five-figure check to the United States Treasury today. January 18 is the deadline for paying the last installment of your 2010 estimated federal income taxes. (Actually, if you file your Form 1040 by January 31 and pay all taxes due then, you are still in compliance.)

Mrs. ToughMoneyLove and I always seem to owe the government tax money. It’s a combination of (a) not withholding enough from my paychecks; (b) decreasing mortgage interest deductions; ¬†and (c) increasing amounts of taxable self-employment income from my online ventures. I don’t mind owing taxes at the end of the year, as long as I am not penalized for owing too much. Lending money to our federal government at 0% interest is the worst option of all.

Until last year, I compensated by having large chunks of taxes withheld from my final two paychecks. Last year I opted to write a separate check on the final estimated tax deadline. I then mailed a smaller check for the balance when we filed our return in April.

To avoid paying an under-withholding penalty, a taxpayer in our bracket must meet one of two tests: (1) withhold/pay 90% of the taxes owed for 2010 or (2) withhold/pay 110% of the taxes we actually paid for 2009. I ran a quick calculation of our estimated 2010 tax obligation. It was smaller than 110% of our 2009 taxes so I wrote a check to meet test (1). We may get hit with a small penalty if the government decides we should have made estimated payments earlier in the year. I’m too lazy to figure that out now.

Although writing a large check to the government is no fun, it serves one purpose: a harsh reminder of how much work a lot of us have to do each year to support the government and those who don’t pay taxes but receive tax credits anyway.

So did any of you pay taxes today?

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16 Responses to “Did You Pay Estimated Taxes?”
  1. Melissa says:

    Nothing would make me happier than to see refundable tax credits go the way of the dodo. Those with little income shouldn’t necessarily have to pay any into the feds, however, it burns me to watch them get thousands back in return from doing zilch. I wouldn’t even care if they were allowed to carry forward their credits. It just burns me to watch them get a fat check filled with MY paid in taxes.

    • Kathryn says:

      I am with you, Melissa! That was something that I learned more about when I did some volunteer tax prep work last year. I was amazed. However, I kept telling myself that those credits must be set to help alleviate extreme poverty. If I am wrong, please don’t disabuse me of that notion; I want to enjoy today’s sunshine! :-)

    • TMN says:

      It seems like a decent number of those people will end up paying taxes in later years, or paid them in years past. So don’t think of it as taking your money, think of it as taking money from themselves in another year. And hopefully other people won’t be as callous toward you if you ever fall into a less than ideal situation.

  2. Rick Beagle says:

    Providing a hand up to those who have fallen on hard times irks you, but banks, oil barons, mercs, agricultural conglomerates, etc. who suck far more from you, not a word? I would tell you to pull your head out of the kool-aid, but I’m not convinced that’s where it’s located….

    • MasterPo says:

      Happy New Year Ricky. Still the same old-same old I see…

    • Aggiebq03 says:

      The real problem here is that regardless of people’s opinion on redistribution of wealth and the governments role in that area, we should all be able to agree that the tax system is the wrong way to do it. If someone owe’s $0 in taxes at the end of the year then fine, but they should never be able to get out money that they did not pay in. The government should not be giving people a year end bonus for not making enough money.

  3. Rick Beagle says:

    Happy New Year MasterPo!

    While I understand the frustration with folks that are content to milk the system for their living, I think you folks tend to forget that the vast majority including that E-1 who just got sent to Afghanistan is doing the best they can with the lot that they have drawn. Many of them young and just finding their place in the world. Or maybe someone who is fighting a major illness and had their livelihood and life savings wiped away regardless of their supposedly “outstanding benefits”. Benefits that ended when they lost their job due to the illness. These are your villains?

    It is unbelievable that you would want a dollar taken from their mouths (because in the end that is what that money supports) in the interest of fairness, while turning a blind eye to the many sins of our tax code and corporations who milk the system for their own nefarious gains (Blackwater/Xe, Haliburton, AIG, BP, etc.).

    At what point does the gap in income become something you folks will acknowledge as a systemic failure of policy vs some sort of conspiracy of the lazy?

    • MasterPo says:

      At what point do YOU acknowledge that:

      1) Nothing in life or the natural world is ever 100% evenly distributed. NOTHING.

      2) A lot of people (and growing unfortunately) are just bone lazy and would rather spend time in front of Xbox than training or studying or something to make their lives better even if it takes years.

      3) You can’t build one man up by taking down another.

      • Rick Beagle says:


        Seriously? On what planet do you think any of your sound bites are true?

        1) No one has ever asked for a 100% evenly distributed whatever. However, asking that there be a level playing field to support a meritocracy is certainly an achievable goal. We should be encouraging people to achieve their max potential, rather than raiding our educational and social nets in order to embellish the bottom line of our corporate sponsors.

        2) This is true for some Americans, but not remotely close for the vast majority of people struggling in this country. Weren’t you and your friends just laughing at someone who had a masters in the blog prior to this? The truth of the matter is, you vilify everyone who does not meet your standards for success by claiming them stupid, and lazy. Which is typical for your political leanings, and just naive.

        3) Finally, we agree. The continued pillage of Americans lower classes(that’s a whopping 98% of us) by the top 2% needs to stop. Unfortunately, you and your ilk lack the imagination to understand the long term effects of what this means. You laugh at the misery of others, castigate them for their “errors”, and repeatedly vote in a manner that insures that you too will be eventually end up in a similar position. But your delusion is so complete that you blame the ones trying to help you, while parroting nonsensical sound bites like those posted above.

        Let me be plain MasterPo, the poor are NOT your enemy.

  4. MasterPo says:

    “Level playing field” – What do you think that means if not equal distribution?! It isn’t ‘fair’ that one person has more $$$ than someone else. Clearly it was ill-gotten. That’s the only possible answer. The country works best when you spread the wealth around from those who make it to those who don’t. Right?

    There are VAST numbers of lazy ass people in America. If you don’t see it then open your eyes. Every single person who cries they can’t get ahead while drinking beer at a bar 3 nights a week or who talks about how worthless college is yet says it’s unfair to go one for another 4 years of school. Or the person spends $100 a week on lottery tickets but thinks an S&P 500 index fund is too risky.

    Shall I go on??

  5. MasterPo says:

    ps- When “the poor” (however weird you choose to define it) take aim at my wallet as their strategy for getting what they don’t have then they are the ‘enemy’ (your word, not mine).

  6. Steve Sildon says:

    The answer lies somewhere between everyone who’s poor is lazy and everyone who is rich is a demonic blood sucker. Those who have been successful financially should participate to some extent or another in contributing to the tax base. The question is, has and always will be how much is enough and how much is too much.

  7. Rick Beagle says:

    “At the California Institute of Technology, they’re developing a way to turn sunlight and water into fuel for our cars. At Oak Ridge National Laboratory, they’re using supercomputers to get a lot more power out of our nuclear facilities. With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have 1 million electric vehicles on the road by 2015.

    We need to get behind this innovation. And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.” – President Obama

    We have a chance to beat the world in innovation and create long term jobs MasterPo. Let’s see what those corrupt politicians in oil soaked states do….

    As to responding to the load of nonsense in this post, not worth anyone’s time.

    The grownups need to be in charge for a bit. Will it be perfect? No. But we are moving forward, and despite the sobbing, the lies, the absurd propaganda, and the racism, we will move forward.

    • MasterPo says:

      All that is what we in the IT field call “vaporware”. Sounds good in theory but will take a loooooooooong time – if ever! – to *really* work (muchless be economical and efficient, which BTW are two words you NEVER hear used when refering to “green” energy! I wonder why??).

      America needs jobs NOW!!!

      No, correction – America needs jobs 2 YEARS AGO!!!!

      *THAT* is why Obama was ‘hired’ to be President. To make good jobs NOW in fields and occupations that exist TODAY. – NOT to pump Heaven-only-knows how many borrowed BILLIONS$$$ on sounds-good ideas that *might* come to pass in 5 years. (And if they are saying 5 I’ll bet a week’s pay it will be at least 10!)

      Obama risks going down in history as a failed President who literally lost an entire generation of American workers.

      Ask the 9.4% unemployed (U6 is 17%) if they are willing to wait 15-20 years for your solar/water and wind jobs (which aren’t necessarily super duper paying jobs either!).

      Ask the guy who can’t make his mortgage payment now if his bank will wait 15-20 years for him to get a “green” job.

      Ask one the 99ers if they will wait another 15-20 years for a new job.

      You can hide your head in the place where sun never shines but truth is truth.

      • Rick Beagle says:

        The fact that you think an entire generation of workers was lost by two years of a Presidency makes the rest of your comments ludicrous. Truth is truth, you got sold a bill of goods and you are in denial that you brought this pain onto yourselves. Now, the same people who warned of this are chastised and their ideas spun into absurd lies. But the assholes who sold you the swampland are still whispering into your -oh so gullible- ears. That’s right, buy up some more of that swampland mentality, it will work this time won’t it?

        People will chastise others for not thinking of their future or diversifying their portfolio…. But the government thinks we should consider options beyond oil based products (diversifying and long term strategy), and they are full of a bunch of idiots?

        Geez, you morons never seem to get it. It is stunning that you can breathe and type and the same time. Honestly.

        Rick Beagle

  8. MasterPo says:

    In regards to “green” energy, let’s talk solar:

    According to Renewable Energy Long Island to put a 100% solar system on my house would cost as follows: (rounded)

    Full installation – $70,000
    LIPA rebate (17,500) – BTW, I have to pay income TAX on the rebate!!
    State tax credit (5,000) – one time
    Fed tax credit (16,000) – one time
    Tax paid on rebate 1,400
    Total out of my pocket = $33,000
    PLUS it adds another $56,000 in value to my property so I now have a HIGHER property tax bill!!

    For a 75% system the initial cost is $52,000 and after rebates/credits/taxs leaves $23,000 with an additional $42,000 in added property value to be taxed.

    And for a 50% system it is initially $35,000, after rebates etc $14,000 and $28,000 in added prop value for taxing.

    Is this REALL& the future image of America you see in your Kool Aid enduced dreams?!?!?!

    Who the heck can afford this fantasy?!?!?!?!?!?!?!?!

    You got an extra $35,000 – $70,000 just laying around to grant me? I’ll send a nice ‘Thank You’ card. I promise.

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