Estimated Taxes

Source: The Berry Group
As 2000 ends - if you are a calendar year taxpayer - make sure to file any unpaid estimated taxes by 1/15/2001
Estimated Taxes:

As 2000 ends - if you are a calendar year taxpayer - make sure to file any unpaid estimated taxes by 1/15/2001.

This is the final due date for estimated taxes for the calendar year 2000.

After this date - you are late.

In general, there are 2 rules to follow regarding estimated taxes: the 100% rule and the 90% rule.

The 100% rule means that you must have made 4 timely payments during the year - 4/15/00, 6/15/00, 9/15/00 & 1/15/2001 that equal what you owed in taxes for calendar year 1999.

The 90% rule means that you must have made these same timely payments that will equal 90% of what you will owe for calendar year 2000.

There are some special exceptions but these rules apply to most taxpayers.

In my experience I find that most accountants do not place enough emphasis on estimated taxes.

Consequently the taxpayer winds up paying needless underpayment penalties and interest.

During the 1999 tax season I saved my clients $377,000.00 in taxes by doing estimated taxes for them - during the year.

After the end of the year not as much can be done because your numbers are locked in.

I tell my clients that if you are in the 28% tax bracket, for example, where else can you make 28% in one day by doing estimated taxes with a more sharpened pencil?

Put time in when preparing your estimated taxes.

It's an important investment.

People don't normally look at their tax bill from an investment standpoint.

In actuality every extra dollar that you pay in taxes are, for example, taking food out of your child's mouth.

Think of what that extra dollar could do, in another way, for a person who hasn't eaten in a week.

Hungry hurts.

It is probably the most fundamental need in life.

One of my former clients - now a multi millionaire - told me once that hunger will make you do anything!

I looked in his eyes & felt his persona when he told me this...I could see that he had been there before when money was not so kind to him.

But he had to do what he had to to at the time.

What he did wasn't pretty but he was Hungry !!!

Possibly increase your donations during the season of giving.

With a 28% tax bite that dollar will really only cost you 72 cents.

Add to that your State & Local tax percentages.

The tax bite increases.

If you think of your dollar in these ways - it might hit home more.

So ...

For those of you who haven't made timely estimated tax payments -

put it on your "to do" list for January 1, 2001.

Have a healthy, happy & prosperous 2001 !!!

Eat well...

The Berry Group, P.O. Box 800, Warrington, PA 18976-0800. Tel: 215-343-8181; Fax: 215-343-8805.