What is the penalty for being late on estimated quarterly taxes?

[Poker CPA]

Zimmer, in addition, the half year calculation is 5.3% (or 5.3 times tax liability, give or take) but an average accountant can get it down to under 4% a fair % of the time.

Hope this helps, if not, get Form 2210. Still confused, its hopeless.

[zimmer879]

An 8% annual rate is significant. IMO unless you are an experienced investor, it would probably be in your best interest to pay estimated taxes as long as you don't go too far over.

[Poker CPA]

Thats a fair conclusion, as long as you know that the IRS will not pay interest on any overpayment.

Please this is not about hate, but simple facts. You must be someone who gets a paycheck, with taxes withheld, and plays poker on the side. You do not like the idea of a payment on April 15th. While most business people (or poker pros) know that they can do better than 8%. And my overall point is, its their choice, not mind. A well informed client, is the best client. If this is your situation, your accountant is a fool.

[zimmer879]

Just to clarify and perhaps I'm stating the obvious at this point but, overall an 8% annual interest penalty is applied to missed estimated taxes. The actual rate is less because each payment is considered delinquent for less than a year. So for example if you miss Q4's payment you will only be charged interest on the 3 months it's overdue, making the actual penalty on that payment approximately 8%/4 = 2%. So for investment comparisons, ignore the actual rate and focus on the annual rate of 8%. CPA if I'm misunderstanding you, let me know.

[zimmer879]

[ QUOTE ]
Please this is not about hate, but simple facts. You must be someone who gets a paycheck, with taxes withheld, and plays poker on the side. You do not like the idea of a payment on April 15th. While most business people (or poker pros) know that they can do better than 8%. And my overall point is, its their choice, not mind. A well informed client, is the best client. If this is your situation, your accountant is a fool.

[/ QUOTE ]

I don't understand some of your comments and I agree that people should be well informed, but I think there was some confusion about the 4% vs 8% rates that were being talked about. I just wanted to clarify. The 8% figure is not to be taken lightly. Many people think they can do better than 8%/yr and if they can or choose to try that's their prerogative. The important thing to remember is that by paying estimated taxes you are essentially earning 8% on that money GUARANTEED, which is next to impossible in the investment world.

[Poker CPA]

Point 1.

Yes the investment calculation is 8%, less the potential loss on an overpayment.

Point 2.

That depends, whats your work situation?

[zimmer879]

[ QUOTE ]
Point 2.

That depends, whats your work situation?

[/ QUOTE ]

I play poker for a living, but I have no idea how that's relevant.

[Poker CPA]

BTW not to many people have "Guaranteed" streams of income. I think your point assumes this fact. This is a poker forum, not a trust fund forum.

[nineinchal]

Isn't it death by lethal injection?

What state are you in? Florida might be electrocution.

[Poker CPA]

So your a poker player and this is not relevant. This I don't understand, do you really understand the estimated tax requirements?