Wrinkle in IRS "quarters"

Archived From: Finance
  • Page :
  • 1
  • Text Only
Voting History
rated:
Am posting for whatever help this might be to (what I realize is) only a small number of FWF participants.  If you do not pay quarterly estimated tax you can move on straightaway and just skip this entirely.

The IRS limits the number of estimated tax payments to "two per quarter".  Be aware my best knowledge is that the IRS does not define "quarters" as do you and I.  We think of four quarters per year, the first running through the end of March, second the end of June, and so forth.  As best I'm able to determine, the IRS uses the following scheme when talking about "quarters":

Tax Year 2016: 1st Quarter 03/01/16 – 05/15/16, 2nd Quarter 05/15/16 – 07/15/16, 3rd Quarter 7/15/16 – 10/15/16, 4th Quarter 10/15/16 – 01/01/17, 7 AM ET

You can hear me using weasel words above because, while I believe I'm right, I'm not 100% certain.  And of course nothing about the IRS is ever 100% certain, is it!

Anyway, we are getting into the June estimated tax payment interval and I wanted to get this out there for whatever it might be worth.

Oh, BTW, I found the above italicized definition here:

There are quarters and then there are quarters 

I can remember, and it was a number of years ago so my precise recollection is poor, but I recall being on the telephone with one of the CC payment services and having the rep explain this to me.  Mostly I just remember thinking it all made no sense as against your definition for "quarters" and mine.  I will be testing this quarter definition thing in the next week or so.  If this thread does not fall completely flat out of massive disinterest, I will post my outcome.

Member Summary
Staff Summary
Thanks for visiting FatWallet.com. Join for free to remove this ad.

I've made more than 2 payments per quarter in the past using the credit card payment processors. The credit card processors themselves are limited to 2 payments per quarter but I just used multiple different processors. 3 processors allowed me to do 6 payments in 1 quarter. Payments went through without any problem.

lithopedion said:   I've made more than 2 payments per quarter in the past using the credit card payment processors. The credit card processors themselves are limited to 2 payments per quarter but I just used multiple different processors. 3 processors allowed me to do 6 payments in 1 quarter. Payments went through without any problem.
Yes, agreed, that two-processor solution has always been an option.  But it used to be a better option.

Regrettably today fees at all but PAY-1040 are up . . . and competition is ebbing.  Here is a reference to where things stand right now:

Processor paucity leading to higher fees? 



 

Not sure why your dates are different from these from F2210 (the form is for 2015 but I would have guessed
the dates would be the same for 2016).....not that it matters for your discussion of how often you can pay

Schedule AI—Annualized Income Installment Method (See the instructions.)
(a) 1/1/15–3/31/15 (b) 1/1/15–5/31/15 (c) 1/1/15–8/31/15 (d) 1/1/15–12/31/15


Pay1040.com - IRS Authorized Payment Provider
Disclaimer
For the correct form, see:
https://www.irs.gov/uac/form-1040-es-estimated-tax-for-individua...
or
https://www.irs.gov/pub/irs-pdf/f1040es.pdf

This week, I was able to purchase debit cards at a grocery store (5% rebate CC) and used those purchased debit cards to pay my Federal 2016 estimated tax payments. Two debit cards at Official Payments at the debit card rate. One card at Pay1040.com at it's debit card rate.
Both indicate a possible delay for the IRS to post these payments, so I do not wait to the last week to get it done.

State estimated tax payments are under different payment terms, check the service you use by state. For example, purchased debit cards are rated at credit card rates in Nebraska, so there is no advantage to using purchased debit cards as best as I can tell. I used a rebate CC with 0% APR into next year.

I recommend getting a IRS payment transcript about a month later after payments are made.
https://www.irs.gov/individuals/transcript-availability

Not sure what you're complaining about. With less than 2% fees for credit card payments and ~ $2.50 for debit, what else do you want? And nobody is making you use any card or pay any fees - feel free to send a check. And I'm scratching my head as to where you got that definition of the quarters. I agree with what kaneohe posted.

The term "quarterly" is a bit misleading with regard to 1040ES payments. For calendar year taxpayers, there are 4 payment due dates, but they don't correspond to calendar quarters. The first payment is due 4/15/16, the second 6/15/16, the third 9/15/16 and the fourth 1/15/17.

Never understood the attraction to paying with cards. Simple to pay via ACH transfer at EFTPS and schedule entire year at once, wish our state allowed that also.

Pursuant to the OP, here is my data point:

Today successfully completed my second estimated tax payment, via PAY1040, within the last three days.  There was no hassle.  Thing is, I also did a PAY1040 estimated tax payment back in April.  So that's three payments within this calendar quarter.  Thus, as mentioned in the OP, and also as defined in the PAY1040 reference there, PAY1040's "quarters" appear not to be calendar quarters.  Can only say this is a help and I'm grateful for one less annoyance. 

EradicateSpam said:   Never understood the attraction to paying with cards. Simple to pay via ACH transfer at EFTPS and schedule entire year at once, wish our state allowed that also.
  Does your bank pay you to make those ACH transfers?


Payments
Disclaimer
EradicateSpam said:   Never understood the attraction to paying with cards. Simple to pay via ACH transfer at EFTPS and schedule entire year at once, wish our state allowed that also.
  As an example- I signed up for a few new to me credit cards this year.  Each card has a required spending amount in order to receive the advertised bonus reward.  This is an easy way to make large enough spending to meet the required spending.  Each card has a regular Cash Back reward which does not cover the cost of this, but helps cover some of the cost of these payments.
Now if you go to some places, you can purchase a Visa or MasterCard Debit Card earning a cash back reward in excess of the cost of the gift card and tax payment.
So this year, I will make money to help me cover the tax.  The new cards have 0% APR into next year when the tax would normally be due.
Also doing this avoids the interest penalties for failing to make quarterly payments.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2017