The other day I was listening to a song over my wireless headphones and cell phone. It was a far cry from the days when I first listened to the songs that were playing. I used to play an LP record on my personal stereo in my bedroom. All of which I had purchased with money I earned from having a paper route. Back in the day, I would listen to the music and I could envision the band on stage playing the music live. The better the band, the recording, my stereo, and the volume it was played at, the more real the vision was. I had a moment of remembrance to the vision and first days of doing so and wondered if kids today get that same experience. I don’t know any kids with paper routes or stereos but maybe they found another way.
In other stories, there is the matter of the year coming to an end and the question of whether or not we are in a good position with our income taxes. Please recall that not too long ago there were changes made. Not only were the typical deductions many people were used to changed but also the withholding amounts from the paychecks. Last year should have been a good example as to whether or not enough money was sent in for estimated taxes. The first question to ask is whether or not we are in a similar income position this year. How did we finish the year and were we advised that estimated tax payments would be needed this year?
Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. Estimated tax requirements are different for farmers and fishermen. You may have to pay estimated tax for the current year if your tax was more than zero in the prior year.
You don’t have to pay estimated tax for the current year if you meet all three of the following conditions.
• You had no tax liability for the prior year
• You were a U.S. citizen or resident for the whole year
• Your prior tax year covered a 12-month period
You had no tax liability for the prior year if your total tax was zero or you didn’t have to file an income tax return.
Maybe you were supposed to pay estimated taxes but did not. You still need to get the payments in and it is better to do it sooner than later. You might be subject to penalties as well. If you receive a paycheck, there may be some relief in paying more tax through your paycheck. It is best to check with your tax professional and HR department.
Finally, please recall that in September I mentioned that the national debt had reached $66,000 per citizen. The update as of today’s writing shows we are now at $69,831.