Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
Generally, if you’re going to owe more than $1,000 to the IRS on April 15, you’re going to be on the hook for estimated tax (ES) payments. Another way to tell if you owe estimated taxes is if your withholding and refundable credits will be less than the smaller of:
a) 90 percent of the tax to be shown on your 2012 tax return
b) 100 percent of the tax shown on your 2011 tax return, covering 12 months
Who must make 2012 ES payments?
1) Self-employed folks (those who get a 1099) or partnerships with a business profit. Having no cash in the bank at the end of the year doesn’t mean you had no profit. This is a common error. You feel there’s no profit because there’s no money left—but you actually lived on the profits all year, paying rent or mortgage, insurance, and utilities; buying food; going to shows; and so on. (That’s what bookkeeping is for—to generate the numbers throughout the year.) When you have a profit throughout the year, not only do you face income taxes but you also face self-employment taxes, which are 13.3 percent of your business profits.
2) People living on investment income, including dividends, interest, partnership draws, and capital gains proceeds. Mutual funds post capital gains profits at the end of the year. While the income might be high, you may treat that income as having been earned in December. This means that your final estimated tax payment may be the highest amount. (There is a special computation on page 4 of Form 2210 to help you avoid late payment penalties when your income is not earned evenly all year.)
3) People who have been collecting unemployment income. Yes, this is definitely taxable for IRS purposes. Most states tax this income as well. This generally comes as a shock at tax time when the tax return shows a significant balance due that folks were not expecting. Avoid making estimated tax payments by having withholding taken out as you go along. Most people facing the huge income loss from unemployment don’t feel they can even live on those low payments, much less on the unemployment payments reduced by withholding. Sadly, though, taxes will be due.
4) People living on Social Security (SS) who also have other income. True, SS and SS disability income are not taxable if that’s the only income you receive. But when you also receive other income, it’s quite likely that up to 85 percent of your Social Security income will be taxed when you’re paying taxes.
What happens if you don’t make your estimated payments when they are due? No worries—if you don’t mind giving the IRS and your state a few extra bucks. You’ll just pay some penalties.
Eva Rosenberg, EA is the publisher of TaxMama.com , where your tax questions are answered. Eva is the author of several books and ebooks, including the new edition of Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.