Trying to understand quarterly estimated tax payments

[MyTwoAs]

I am trying to get a good grasp on the quarterly estimated tax payments. Here's some background:

My husband has a full-time salaried + commission job and has taxes withheld.

I did not pay quarterly taxes in 2009 because I didn't want to take the time to figure things out. =P (doing that now)

When I prepared our 2009 taxes, we still ended up with a net federal refund of several thousand dollars even though I didn't pay any quarterly taxes.

Since we didn't owe in 2009, as a married couple filing jointly, do I need to file quarterly taxes on my income this year?

[Austin'smom]

I'm an accountant, and my brother and sister and law are in a similar situation and I advised them to go with the first option...

For this year you will need to either:

- pay 100% of the amount of federal taxed owned for 2009 through withholdings/ estimated payments. What I recommend is to take your total tax owed for 2009 and divide by 4. Each quarter verify that your husbands withholdings for that quarter total that amount ( 1/4 of total 2009 tax owed) or more. If they do not then you will need to make a quarterly payment.
- pay 90% of tax owed for 2010. This is a more complicated calculation, as you need to take in account deductions/ credits that you qualify for, and any changes in monthly income to help come up with the estimation.

If your Adjusted gross income is over $150k, then different rules apply... you would need to pay 110% of your 2009 tax.

I hope this helps.

[MyTwoAs]

Thanks Austin, this does help. I read the 100% rule on the IRS website but the way you've explained it makes more sense.

In 2009 our AGI was close to the $150k mark but we didn't have to pay AMT. For 2010 we expect the AGI to be over $150k, should we go ahead and plan for 110% or will that only factor in for 2011 after we actually file our 2010 taxes and report that AGI of over $150k?

Again, thanks for your explanation!

[Austin'smom]

I'm glad I could help clarify this... You should go ahead and plan for 110% if you are expecting your combined AGI to be over $150k. If you aren't over $150k on Dec 31 you could decrease the amount of your final estimated payment that is due Jan 15th, or file 1040ES and delay the last payment to Jan 31st (if you file your 1040 and pay any taxes due by January 31st).