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CA Second Quarter Estimated Taxes

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  • Tom Kazansky Tom Kazansky 
    Participant
    Status: Dentist
    Posts: 29
    Joined: 12/02/2017

    Can anyone help me interpret this CA rule for the Second quarter?

    Important: California differs from federal. To avoid an estimate penalty, you must pay at least:

    • 30 percent First quarter (April 15)
    • 40 percent Second quarter (June 17)
    • 0 percent Third quarter (September 16)
    • 30 percent Fourth quarter (January 15)

    CA tax is being withheld from paychecks, but calculations reveal it may be a little short.

    If an estimated payment is being made on June 17 to supplement this shortage, does the payment need to bring total sum (withholding + estimated tax) of all CA tax paid YTD to 70% of the estimated CA tax for the year?

    Or is it enough to make an estimated tax payment that keeps total sum (withholding + estimated tax) within 90% of estimated CA tax owed for the year?

    #220777 Reply
    Avatar SLC OB 
    Participant
    Status: Physician
    Posts: 456
    Joined: 06/23/2018

    Ok Iceman,

    I believe (I am NOT an expert on taxes), that if you are paying quarterly, you should have 70% paid by June 17th. However, I am in California too… going from 1099 to W2 in July, and my tax guy reduced my payment in June due to the fact that my employer will be continuing to withdraw my taxes through the W2 payment and did not want it overpaid come Dec 31st. If you have a W2 and 1099 income, I think you are good if you get 90% of taxes owed in by Jan. Especially if your W2 income is a lot greater than your 1099.

    #220906 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7523
    Joined: 01/09/2016

    CA estimate rules truly are bizarre, aren’t they? I don’t know that it will matter that much either way. However, I’d just increase withholdings and not pay estimates. If you haven’t already paid in the first quarter, you’re behind, and increasing withholdings will avoid a penalty.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #220923 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3800
    Joined: 01/08/2016
    However, I’d just increase withholdings and not pay estimates.

    Click to expand…

    this is the correct answer.

    #220954 Reply
    Liked by jfoxcpacfp

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