Six Tips for People Who Pay Estimated Taxes

Posted on March 7, 2025 by FCA Admin

Issue Number:    IRS Tax Tip 2012-65

Inside This Issue

You may need to pay estimated taxes to the IRS during the year if you have income that is not subject to withholding. This depends on what you do for a living and the types of income you receive.

These six tips from the IRS explain estimated taxes and how to pay them.

1. If you have income from sources such as self-employment, interest, dividends, alimony, rent, gains from the sales of assets, prizes or awards, then you may have to pay estimated tax.

2. As a general rule, you must pay estimated taxes in 2012 if both of these statements apply: 1) You expect to owe at least $1,000 in tax after subtracting your tax withholding (if you have any) and tax credits, and 2) You expect your withholding and credits to be less than the smaller of 90 percent of your 2012 taxes or 100 percent of the tax on your 2011 return. Special rules apply for farmers, fishermen, certain household employers and certain higher income taxpayers.

3. For Sole Proprietors, Partners and S Corporation shareholders, you generally have to make estimated tax payments if you expect to owe $1,000 or more in tax when you file your return.

4. To figure your estimated tax, include your expected gross income, taxable income, taxes, deductions and credits for the year. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, for this. You want to be as accurate as possible to avoid penalties. Also, consider changes in your situation and recent tax law changes.

5. The year is divided into four payment periods, or due dates, for estimated tax purposes. Those dates generally are April 15, June 15, Sept. 15 and Jan. 15 of the next or following year.

6. Form 1040-ES, Estimated Tax for Individuals, has everything you need to pay estimated taxes. It includes instructions, worksheets, schedules and payment vouchers. However, the easiest way to pay estimated taxes is electronically through the Electronic Federal Tax Payment System, or EFTPS, at www.irs.gov. You can also pay estimated taxes by check or money order using the Estimated Tax Payment Voucher or by credit or debit card.

For more information on estimated taxes, refer to Form 1040-ES and its instructions and Publication 505, Tax Withholding and Estimated Tax. These forms and publications are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Links:

Note. From Issue Number: IRS Tax Tip 2012-65. Copyright 2012 by Copyright Holder. Reprinted with permission.

Posted in education, personal finance, Savings, Taxes | Comments Off on Six Tips for People Who Pay Estimated Taxes

Action Items for the New Year

Posted on February 20, 2025 by FCA Admin

I wrote this blog two years ago as a means of encouraging readers to prepare for the New Year.  Well, two years later, this message is still relevant as the times have not changed much from the prior years. Therefore, this message bears repeating. As 2010 draws to a close, many are hopeful for significant changes in 2011.  Among these is a better economic outlook.  But what can you do now to make way for a better economic outlook?

  1. Keep enough cash available.  I can’t stress this enough.  This year has been a record year for layoffs.  Even if you’re not in danger of losing your job, it is still imperative to keep enough cash on hand.  Financial experts recommend having enough cash on hand to cover between 6 and 9 months of living expenses. 
  2. Diversify your investment portfolio. In order to have a well diversified investment portfolio, it is critical that one purchase stock in both U.S. and international companies.   Another way to diversity is to purchase investments in large and small companies or fixed income and stocks.  A financial advisor can show you how to properly diversity your investments.
  3. Continue to live below your means.  This one is self explanatory. At least I hope it is.  Living below your means does not mean depriving yourself of the good things in life.  It basically encompasses making wiser choices about everyday purchases.  It’s about distinguishing between wants and needs.
  4. Pay off expensive debts.  Basically what this means is paying off those high interest rate credit cards.  If you’re having difficulty, your accountant or financial advisor can assist you with coming up with a plan.  Another option is to contact the credit card company directly and ask them to lower your interest rate.
  5. Review your credit report. This is a high priority especially if you are considering refinancing your mortgage.  Mortgage rates are at an all time low.  Even if you are not planning on refinancing, reviewing your credit report on a quarterly or annual basis is a good habit to create.  Check out www.annualcreditreport.com for more information on how to obtain a free copy of your credit report.
  6. Create a budget and stick to it. Even though I listed this topic last, it does not mean that it is the least important.  As I mentioned in a previous blog, budgets build discipline.  I always encourage everyone to create one.  Not only will you see where your money is going, you will also see how much you have left for savings.  If you need help creating and sticking to a budget, be sure to reach out to your accountant or financial professional.

With that being said, I wish you all a Happy Holiday Season and a Prosperous 2011!

Posted in credit cards, education, investing, personal finance, Savings | Tagged , , , | Comments Off on Action Items for the New Year

Start Smart in 2025

Posted on January 3, 2025 by FCA Admin

Let’s face it, 2024 had been a very challenging year for everyone regardless of income level.  As we prepare for 2025, let’s start planning now in order to avoid some of the financial pitfalls encountered in 2024. For example, have you put off creating that emergency fund?  Start planning now so that in January 2025, you’ll have a game plan in place.  Other things to think about:

  • Check your withholding allowances on your pay statement.  Don’t give the government an interest free loan.   Use the free calculators on bankrate.com to assist you.
  • Plan to pay more than the minimum on your credit card.  This will help you avoid excessive interest fees.
  • Develop the monthly budget. Start early and do it every month.  Soon it will become a habit.
  • Start using the personal finance software.  A great choice is mint.com.  This free software allows you to track your finances and even provides a weekly summary.
  • Learn and start investing. My personal favorite is sharebuilder.com. This investing site is very user friendly and also has a section on investor education.

These are just a few of suggestions on how to start the New Year on a financially sound basis.  What are some of the other financial techniques that you will employ?

j0442969

Posted in education, investing, personal finance, Savings | Tagged , | Comments Off on Start Smart in 2025

Top 6 Action Items for the New Year

Posted on December 10, 2024 by FCA Admin

As 2008 draws to a close, many are hopeful for significant changes in 2009.  Among these is a better economic outlook.  But what can you do now to make way for a better economic outlook?

 

    1. Keep enough cash available.  I can’t stress this enough.  This year has been a record year for layoffs.  Even if you’re not in danger of losing your job, it is still imperative to keep enough cash on hand.  Financial experts recommend having enough cash on hand to cover between 6 and 9 months of living expenses. 

    1. Diversify your investment portfolio. In order to have a well diversified investment portfolio, it is critical that one purchase stock in both U.S. and international companies.   Another way to diversity is to purchase investments in large and small companies or fixed income and stocks.  A financial advisor can show you how to properly diversity your investments.

    1. Continue to live below your means.  This one is self explanatory. At least I hope it is.  Living below your means does not mean depriving yourself of the good things in life.  It basically encompasses making wiser choices about everyday purchases.  It’s about distinguishing between wants and needs.

    1. Pay off expensive debts.  Basically what this means is paying off those high interest rate credit cards.  If you’re having difficulty, your accountant or financial advisor can assist you with coming up with a plan.  Another option is to contact the credit card company directly and ask them to lower your interest rate.

    1. Review your credit report. This is a high priority especially if you are considering refinancing your mortgage.  Mortgage rates are at an all time low.  Even if you are not planning on refinancing, reviewing your credit report on a quarterly or annual basis is a good habit to create.  Check out www.annualcreditreport.com for more information on how to obtain a free copy of your credit report.

  1. Create a budget and stick to it. Even though I listed this topic last, it does not mean that it is the least important.  As I mentioned in a previous blog, budgets build discipline.  I always encourage everyone to create one.  Not only will you see where your money is going, you will also see how much you have left for savings.  If you need help creating and sticking to a budget, be sure to reach out to your accountant or financial professional.

Posted in personal finance | Tagged | Comments Off on Top 6 Action Items for the New Year

Important tips if you’re recently married

Posted on November 7, 2024 by FCA Admin

If you are recently married or planning to get married, be sure to notify the appropriate agencies. This will ensure that there are no complications come tax season.

  • The IRS – Form 8822 should be completed if you have a new address. The form is available online at IRS.gov.

 

  •  Social Security Administration– Form SS-5, Application for a Social Security card should be completed if your name has changed.  The form is available on SSA’s web site at www.socialsecurity.gov,

 

  • The U.S. Postal Service– The U.S. Postal Service should be notified so that your mail will be sent to the correct location. Change of address can be done online at www.usps.com

 

  • Inform your Employer– Your employer should be aware of your name and address change so that your Form W-2 is correct and updated.   Contact the Human Resources Department to ensure that your information is updated.

 

Follow us on Twitter: http:// twitter.com/1stCapAdvise.

Posted in employment, Taxes | Tagged , | Comments Off on Important tips if you’re recently married

Check up on your charity

Posted on October 10, 2024 by FCA Admin

 

 

These days you may receive several calls or mailings for making charitable donations.  Of course we all want to help out.  Money is very tight in this economy and no one wants to feel that they are being taken for a ride.  But how do you ensure that you are making a donation to a reputable charity?   Follow these simple tips and you will be on the path to making a wise decision:

 

  • Check to ensure that the charity is a tax exempt non-profit.  Use IRS Publication 78 to check the status of the charity before you donate.  Publication 78 is available at the IRS website and is always up to date.  http://www.irs.gov/charities/article/0,,id=96136,00.html
  • Use Charity Navigator to check the purpose and financials of your chosen charity.  Charity Navigator is available at www.charitynavigator.org.
  • Lastly, review the charity’s Form 990, Return of Organization Exempt from Income Tax. This form is required to be filed to the IRS yearly by tax exempt non-profits.  Additionally, this form is required to be posted on a non–profits website or made readily available to the public. The 990 will list the amount of income earned and expenses incurred.

With these few simple tips, you are on your way to making a wise decision with your charitable dollars.

 

 

Posted in charity, personal finance | Tagged , | Comments Off on Check up on your charity

To transfer or not to transfer

Posted on September 10, 2024 by FCA Admin

Credit card balance transfers are very common.  We usually think we are getting a good deal if we are offered a zero percent APR balance transfer.  This is a great offer.  However, too often we fail to think about the long term effects of a credit card balance transfer.

For example, can you avoid incurring new charges on the old card?  For many people this is a difficult task.  Additionally, what do you plan to do with the old card?  It is recommended that you keep the account open.  This helps build up your FICO score.

Other important factors to consider are whether you will get approved for the new card.  Applying is the easy part. However, the challenge is getting the approval in the first place.  Lastly, be sure to consider fees that will be incurred as a result of the balance transfer.  Most if not all major credit card companies charge fees for balance transfers.

For more useful information on credit cards and balance transfers, visit the bankrate.com website and search on credit cards.

Posted in education, personal finance | Comments Off on To transfer or not to transfer

Don’t let credit card debt get you down

Posted on August 10, 2024 by FCA Admin

So you have a lot of credit card debt?  So what now?  Many people find themselves in this situation and feel helpless and hopeless.  The key is to not give up.  There are many resources out there to help you. Among them are:

 

  • Credit counseling: There are several nonprofit agencies out there dedicated to helping you.  Do not fall for those agencies that are asking you to pay up front.  The real agencies will not charge for their services.

 

  • Consolidation loan: This technique has been useful for many people. Consolidation loans can be obtained through many resources.  Check with your local bank or consider peer to peer lending.

 

  • Debt settlement: Consider contacting your credit card company and negotiate to settle your debt for a lower amount.  For example, try to settle half of your debt.  You can accomplish this by calling or writing to your credit card company.  Explain the situation to them and see if they are willing to negotiate and settle a portion of your debt.

 

  • Pay off your high interest cards: Prioritize your debt so that you are paying off your high-interest credit cards first. This will take some practice.  Be sure to take into account all of the debt that you owe so that you can come up with the right strategy.

 

 

For more useful information on credit cards and balance transfers, visit the bankrate.com website and search on credit cards.

Posted in credit cards, education, personal finance | Comments Off on Don’t let credit card debt get you down

Get it in writing.

Posted on July 31, 2024 by FCA Admin

 

Many people are now borrowing from family and friends due to the current economic crisis.   This new phenomenon known as social lending has increased significantly over the past year. However, many fail to document the loan.  This in turn leads to disputes later on regarding the money borrowed.   Experts now recommend using a third party intermediary that specializes in managing social loans.  One of these companies is Virgin Money USA http://www.virginmoneyus.com/.

The company makes it easy and affordable to facilitate the transaction.  This will save many the heart ache and headache associated with lending money to friends and family.  Here’s how it works:

·         Find someone that you would like to borrow money from and create a proposal.

·         Make contact with Virgin money to manage the loan.

·         Select interest rate and repayment terms.

Another good reason to use a service such as Virgin Money is that the company follows up and takes immediate action if the borrower is delinquent.  

Posted in loans | Tagged | Comments Off on Get it in writing.

IRS Can Help When Starting a Small Business

Posted on June 22, 2024 by FCA Admin

If you are opening a new business this summer, the IRS has some basic federal tax information to help you get started.

Here are some things to consider when starting a business:

  • Type of Business One of the first decisions you need to make is what type of business you are going to establish. The most common types of businesses are sole proprietorship, partnership, corporation, S corporation, and Limited Liability Company. The type of business you establish determines which tax forms you will need to file.
  • Types of Taxes The type of business you operate also determines what types of taxes you will pay and how you will pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
  • Employer Identification Number A business typically needs to get an Employer Identification Number to use as an identifier for tax purposes. Check IRS.gov to find out whether you will need this number, and, if so, you can apply for an EIN online.
  • Recordkeeping Good records will help you keep track of deductible expenses, prepare your tax returns and support items that you report on your tax returns. Good records will also help you monitor the progress of your business and prepare your financial statements. You may choose any recordkeeping system that clearly shows your income and expenses.
  • Tax Year  Every business taxpayer must figure taxable income on an annual basis called a tax year. Your tax year can be either a calendar year or a fiscal year.
  • Accounting Method  Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.

Visit the IRS.gov website and click on the ‘Businesses’ tab for more information and resources, including a special section on starting a business. Publication 583, Starting a Business and Keeping Records, can also help new business owners understand their federal tax responsibilities. The publication is also available on IRS.gov or by calling 800-TAX-FORM (800-829-3676). 
Links:

YouTube Video:

  • Employer Identification Number – English

Note. From Issue Number: IRS Tax Tip 2012-11. Copyright 2013 by Copyright Holder. Reprinted with permission.

Posted in education, employment, personal finance, Savings, Taxes | Comments Off on IRS Can Help When Starting a Small Business