Our Tax Payment Planning Worksheet is designed to help you calculate and pay your 2011 tax liability, avoiding both an underpayment or overpayment of tax.
We first help you determine your target tax liability for 2011. Perhaps you do not like having to pay a balance due with your tax return. You could calculate your target based upon 100% of your estimated 2011 tax liability. On the other hand, paying a balance due with your tax return may not be bad if you want to only pay as little tax during the year as the IRS requires. This approach allows you to keep your money for as long as possible without incurring an underpayment penalty. This worksheet allows you to choose a safe target tax liability that best suits your needs.
Once we establish your target tax liability, we will ask about any payments already made toward that target, whether you applied a refund from 2010, made one or more estimated payments, or had withholding from your wages. We will then help you prepare one or more W-4 withholding certificates and/or estimated payment vouchers that will be calculated to pay your remaining tax based upon your target tax liability.
The Tax Payment Planning Worksheet reflects the complexity of the underlying planning process. Therefore, we recommend that you use the topic interview which presents to you in clear simple language, the choices that are relevant to you. The interview will cut your planning time significantly.
We also recommend that you review and update your plan as necessary at least twice during the year.
Our State and Local Tax Payments Worksheet is designed to collect amounts from you and to carry the proper amounts to Schedule A. The information from this worksheet carries to the mini-worksheet above line 5 of Schedule A and also to our state programs.
On this worksheet, we gather information about certain state and local tax payments, including estimated tax payments and other tax payments made during 2010. This worksheet does not gather information about state and local taxes withheld; we collect information about those taxes on other forms (e.g., Form W-2).
Here is a summary of the different parts of the worksheet:
In Part I, we ask for information about state estimated tax payments for 2010. If the payment was made in 2009, it will not carry to Schedule A; nor will it carry to our state programs. If the payment was made in 2010, then it will carry to Schedule A. We'll also carry a payment made in 2010 to our state programs unless the payment was a fourth-quarter payment for 2009. Payments made after 2010 don't carry to Schedule A but do carry to our state programs.
In Part II, we ask for information about local estimated tax payments for 2010. If the payment was made in 2009, it will not carry to Schedule A. If the payment was made in 2010, then it will carry to Schedule A. Payments made after 2010 don't carry to Schedule A. Our state programs don't carry information on local estimated tax payments.
In Part III, we ask for state prior-year overpayments applied to 2010.
In Part IV, we ask for local prior-year overpayments applied to 2010.
In Part V, we ask for other state taxes paid in 2010.
In Part VI, we ask for other local taxes paid in 2010.
In Part VII, we summarize the amount that we are carrying to the mini-worksheet above line 5 of Schedule A.