Just a reminder about the 2nd quarter 2012 estimated tax payment for individual federal income tax is due June 15. Ohio uses the same deadline. For Canton, North Canton, Akron, Cleveland, and other cities the due date for the individual second estimate is July 31st. It is July 30th for Massillon.
Federal and Ohio: If you are self-employed, or have any other sources of income where tax is not withheld, it is likely you could fall under the rules requiring estimated tax payments. The idea behind it is that at least 90% of your tax should be paid usually by the due date of the fourth installment. Ohio has similar rules. There is a penalty that could be applied if you do not due this. So far in 2012 that penalty is 3% for the underpayment. Some people feel that is low enough just to pay the penalty and not pay estimates, but you need to be careful. There are safe harbors, exceptions, and different ways to calculate those requirements. Some exceptions to the penalty are:
- Pay at least 90% of the current tax owed via all means (withholding, credits, etc…)
- Pay 100% (or 110% for higher income filers) of the previous year’s tax liability
- Farmers and fisherman can pay in one estimate by January 17th if 2/3rds of their income is from those sources for the current or prior year. If they also file by March 1st, the payment can even be by that date
- Tax due is under $1,000 ($500 for Ohio)
- You can vary your payments as you earn the income without being penalized if you feel like filing a complicated 2210 form with your return
Due dates are:
- April 17, 2012
- June 15, 2012
- September 17, 2012
- January 15, 2013
As of this writing, Ohio says on their website that the third estimate is due September 15th, which is a Saturday, and the fourth estimate is due January 17th, where the 15th would be a Tuesday. Translation: that doesn’t make sense. I’m pretty sure they made a mistake and intended the due dates to be the same as the federal. It can be found here: Ohio Dept. of Taxation’s Individual Estimated Tax Info
Ohio Cities: Canton, Massillon, and Ohio cities in general have different estimated tax rules for individuals. You are supposed to make quarterly payments that are each 1/4 of the amount due the previous year. In fact, they want the first one added to the previous year tax liability on the return. Convenient isn’t it? I can see their logic, but I still see a lot of people leave that off their return anyway and just pay a penalty. The penalty usually runs $25 plus interest for not paying in at least 75% of the tax liability for a year. (90% according to CCA forms) Like the federal requirements there is an exception if you pay 100% of the previous year for many cities. Do cities actually follow through on those penalties? Yes. Not always, but frequent enough that it usually does not surprise me.
Due dates of estimated payments for Ohio cities generally are:
- April 30, 2012
- July 31, 2012
- October 31, 2012
- January 31, 2013
For some reason the due dates for Massillon are all on the 30th and not the 31st. I’ve only known banks to pretend that all months end on the 30th but I suppose cities can get in on the act too.
My heartfelt thoughts are with you if you really do have to fill out that CCA form. RITA will generally send you estimated tax bills if you filled out your taxes correctly. They make it look like a scary tax notice but if you look carefully you can see that it is just an estimated payment voucher.
Have a question? Send me a message!