Is there a reason I shouldn't pay my fourth quarter estimated taxes early?

[Mike 03]

Just trying to get ahead of the chaos we're expecting to erupt on January 20. I expect many things to go wrong almost immediately. I know the IRS is one of the agencies targeted for cuts and an overhaul of some kind. There are a lot of rumors and hyperbole, such as half the employees at the IRS could be eliminated. I just thought it might be a good idea to get my estimated tax checks through that mess early.

My experiences with the IRS have always been very positive. The folks there helped me out a lot after I was accidentally declared dead, and then again following an identity theft/someone filing under my name. There really are some pretty cool people there, and I don't wish them ill.

Thanks for any advice on this.

[Shermann]

1. I doubt even Trump could run the IRS into the ground that quickly. nt

[Mike 03]

8. Probably not. But then there's also the psychology of the

people working there. Knowing what's coming, will a lot of them be leaving or spending the bulk of their time looking for jobs? Stage a walk out? However unlikely, I'm factoring in any exigency I can think of when trying to imagine what could be coming and how to hedge against it.

I will just never give Trump the benefit of the doubt not to mess something up, worse and more quickly than anticipated.

[surfered]

2. See below

If your estimate is based upon 100% of your prior year’s tax and you are making four equal payments, there is no financial benefit to paying early.

If you have underpaid previous estimates, interest is calculated till the date of payment. In that case paying early might save you some interest.

[Mike 03]

5. Thanks! In my case it's 4 equal payments, but this is

good to file away for future reference.

[questionseverything]

3. I always pay mine early, by my thinking with just a month til they're due

Your already ⏰ late

I have seen so many self employed people’s lives ruined over taxes I don’t mess with it

[Mike 03]

6. That's me too. I am very OCD about paying my taxes. But this would

be early even for me.

[nmmi]

4. Q4 is due Jan 15, 5 days before inauguration date. I do pay STATE estimated taxes before Dec 31, so I can deduct

from federal income taxes, but now that I think about it, I haven't had itemized deductions since 2021 when a special situation ended, so it's just something i do now as my default way of doing things.

Starting in tax year 2026, the standard deduction drops in half (and then I'd be itemizing again), unless Congress renews that part of the tRump so-called tax cuts, but I'm 99.99% certain Congress will act to maintain that provision.

(Note: when the tRump tax cuts doubled the standard deduction, they took away the personal exemption which was almost as large as the change in the standard deduction, but the media and message board pundits hardly ever mention that).

On deducting state income taxes from federal: I should note that it is also subject to a $10,000 cap on state and local taxes (the infamous SALT deduction cap that the greedbangers came up with as part of the so-called tRump tax cuts to punish blue states with relatively high tax rates who strive to provide a better-than-bare-bones safety net and do other blue-statey things like provide money to help out poorer school districts whose property tax base is weak). A thread on the SALT deduction cap: https://www.democraticunderground.com/10143355690

A negative: when paying taxes early, one foregoes the interest one can earn in the meantime, like 5% or so APR in a money market fund for example, so that would be a little over 0.4%/month. $4 bucks per $1,000. Or the potential of a larger amount if invested in equities.

[Mike 03]

7. Great info. Yes, you are right about foregoing interest. That's the kind

of thing my dad would have reminded me about. He did not want the government to have his money before it was absolutely necessary. My estimated payments are not very big so the sacrificed interest won't be a major sacrifice.

Come to think of it, I haven't taken itemized deductions--other than charitable--for decades. When I was a young writer just starting out I had so many deductions for office supplies, postage and mailing, Xerox, etc... and I remember even the purchases of some books and travel were deductible as research (and I didn't cheat ). Oh, and part of my apartment was "office space." There were some deductions I would have been embarrassed to take but was entitled to, like "depreciation."

Years ago, though, I remember reading (I don't know if this is still true) that too many itemized deductions or certain types of deductions were considered a "red flag" that could get you audited. I was a piss-poor writer at the time and my deductions often were larger than the amount of money I made writing in those early days. I almost always got refunds. I was writing my ass off but spending more than I was earning just on writing alone.

Bizarre as it sounds, I think of those as really good times. Scary but fun. When you don't have anything, you also don't have anything to lose.