Wealth Management   |   Retirement Planning   |   Tax Planning   |   Fiduciary Services   |   Cleveland, Akron, Canton, Ohio

Estimated Income Tax Payment Reminder

June 7, 2016

For True Wealth Design clients, we generally prefer to handle necessary withholding by adjusting withholding from wages, pensions, or IRA distributions. Doing so is more efficient, reducing the need to make payments every few months for federal or state income tax payments, among other benefits.

However, for various reasons some clients may have estimated payment vouchers for the current year. These are included with your tax return documents from the year prior. 

Payment due dates are as follows: 

  • January 1 – March 31 due April 15
  • April 1 – May 31 due June 15
  • June 1 – August 31 due September 15
  • September 1 – December 31 due January 15* of the following year

*Note that planning should be done to decide whether to pay the fourth quarter state tax estimate (or a greater amount than the estimate) before December 31st each year. Doing so allows you to potentially deduct the payment against this year's federal incomes taxes. However, if the deduction is likely best used for the following year, making after December 31st but before the January 15th deadline is warranted. True Wealth Design does this analysis for every client in our Integrated Wealth Management service model as part of our fourth quarter Tax & Investment Review Meeting

For Ohio, to avoid an underpayment penalty, you have to sure make your Ohio income tax withholding is equal to or greater than either of the following: 

  • 100% of the prior year Ohio income tax or
  • 90% of the current year tax.

Quarterly estimated payments can be made electronically or by mail at:

Ohio Department of Taxation, PO Box 1460, Columbus, Ohio 43216-1460

For the IRS estimated income tax, to avoid an underpayment penalty, you have to make your federal income tax withholding equal to or greater than either of the following:

  •  100% of the prior year federal income tax owed (110% if adjusted gross income is > $150K)
  • 90% of the current year tax.

Quarterly estimated payments can be made electronically or by mail at:

Internal Revenue Service, P.O. Box 802502, Cincinnati, OH 45280-2502 

CAUTION: If you are required to make estimated payments and do not, you may be subject to an interest penalty on your underpayment of estimated taxes. No one likes to pay taxes on top of their taxes. Thus we plan accordingly to avoid them.

Please call our office with any questions on making your payments.

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