Quarterly Taxes- when did you start?

[Amanda G.]

I'm cheap (ahem, frugal) and I've been doing my own annual taxes. At what point do you need to start paying quarterly? I have a W-2 job, and happily the rental portfolio is growing.

[Ashish Acharya]

Originally posted by @Amanda G.:

I'm cheap (ahem, frugal) and I've been doing my own annual taxes. At what point do you need to start paying quarterly? I have a W-2 job, and happily the rental portfolio is growing.

 If you have w-2 job, you can ask your employers to withhold more so that you don’t have to pay quarterly if your rental is staring to have decent net income.

Of course you need to know how much more to withheld. W-2 withholding also has one advantage. See below 

Estimated Tax Payments:

Lesser of

1. 100% of the tax shown on the taxpayer's return for the preceding year or
2. 90% of his tax for the current year.

If PY AGI was over $150,000 ($75,000 for marrieds filing separate returns) must pay the lesser of

1. 110% of the tax shown on the PY return
2. 90% of their CY tax liability

Four times a year, 25% of the “required annual payment” for the current year. Note: The 25% requirement is applied separately to each installment. Thus, a taxpayer may be penalized for the underpayment of estimated taxes for any installment for which his estimated tax payments plus taxes withheld from salary (and certain other payments) don't total at least 25% of the required annual payment.

Exception: Income tax withheld by an employer from an employee's wages or salary is treated as paid in equal amounts on each of the four installment due dates unless the individual establishes the dates on which the amounts were actually withheld. Thus, if an employee asks his employer to withhold additional amounts for the rest of the year, the penalty can be retroactively eliminated. This is because the heavy year-end withholding will be treated as paid equally over the four installment due dates.