IRS FORMS 1040-ES VOUCHERS

You can obtain "blank" copies of 2012 Form 1040-ES "Estimated Tax Vouchers" for individuals by going to the IRS website (www.irs.gov) and looking under "Forms & Publications."  You can also access these vouchers by going to my website and looking under "Tax Center" and then "Forms & Pulications."  Type in "2012 Form 1040-ES" and it should direct you to the IRS website.   Below are the rules: 

Safe Harbor Rule
“Safe Harbor” estimated tax payments for 2012 are based on your prior year’s total tax liability.  Depending on your 2011 adjusted gross income, one of the following rules will apply for 2012:
1. Taxpayers who had adjusted gross income (line 37 on Form 1040) of $150,000 or less on their 2011 return are not subject to underpayment penalties if their payments are based on 100% of the prior year’s tax.
 
2. Taxpayers who had adjusted gross income (line 37 on Form 1040) over $150,000 on their 2011 return are not subject to underpayment penalties if their payments are based on 110% of the prior year’s tax.
You would generally use the "safe harbor" rule if your taxable income for the current year will be about the same or greater than your prior year taxable income. 
Timely estimated tax payments must be made in "four" equal quarterly payments due as follows:
  •         1st Quarter April 15, 2012
  •         2nd Quarter June 15, 2012
  •         3rd Quarter September 15, 2012
  •         4th Quarter January 15, 2013
 
90% Rule
Taxpayers continue to have the option of avoiding the underpayment penalty by making timely payments during the year that equal 90% of your actual 2012 tax liability.  In addition, the annualized income method of calculating estimated tax payments is still available.  You would generally rely on the 90% rule when your taxable income for the current year will likely be less than your prior year taxable income. 

Timely Payments
In order to qualify for the above penalty exception, estimated taxes must be made timely. If any of the estimated tax payments are as little as one dollar short or one day late, a penalty will be assessed.

Coordinating Estimated Payments With Your W-2 Withholding
Many taxpayers pay in their tax using a combination of estimated tax deposits and withholding from W-2 wages.  In those situations, unless otherwise instructed by you, I have assumed that your 2012 withholding will be equal to or exceed your 2011 withholding when preparing your 2011 tax return.    Should your withholding be less in 2012 than anticipated, please contact me immediately so that the necessary adjustments can be made.

Retirement in 2012
Revising your estimated tax payments is particularly important if you will be retiring in 2012 because your withholding on wages ceases when you retire.  In addition, a portion of Social Security Benefits may be taxed in 2012, further increasing you tax liability.  Please advise me immediately of your retirement plans so that I may modify your estimated tax payments accordingly.

Estimated Tax Payments Don’t Qualify for Extension
Another situation that requires special attention involves taxpayers that have extended the due date of their 2011 tax return.  The extension does not extend the due date of estimated tax payments.  It is more difficult to avoid a penalty in this situation because I do not know what “last year’s tax” is in order to use the prior year’s tax liability “safe harbor” exception.  However, it is possible to estimate your 2011 income tax as well as your 2012 taxable income so that timely and reasonably accurate estimated tax payments can be made.  Remember, you must pay any tax owed with your extension to avoid the IRS assessing you late payment penalties and interest. 
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