Just as a heads up for those of us living in the state of California. This may or may not apply for you. For those of you making estimated payments for Fiduaciaries, the formula will no longer be 25% of your estimated tax liability each quarter. It is changing to 30%-30%-20%-20% as stated below from the 2009 Form 541 instructions:
Estimated tax payments due for each taxable year beginning on or after January 1, 2009, are now required to be 30% of the required estimated tax liability for the 1st and 2nd required installments and 20% of the required estimated tax liability for the 3rd and 4th required installments. Prior to this law change, estimated tax payments were made in four equal (25%) payments. Estates and trusts with adjusted gross income over $1,000,000 may no longer compute estimated tax payments based on 100% of the tax shown on the return of the preceding year. Estates and trusts with a tax liability less than $500 do not need to make estimated tax payments.
Just be certain that you are making the appropriate estimates and payments in order not to incur any penalties or issues with the FTB. If you annualize your payments you shouldn’t have any problems.
Double check if you are managing your estates or trusts that you have enough money put aside to cover any projected tax liabilities. This looks to be the next niche that the FTB will come after in terms of auditing for exceptions. Take a look to see what investments may be down or not earning as much so you can project appropriately what kind of tax liability that you will be looking at.
If there are any other issues in terms of estimates, be sure to err this time on the side of being conservative. The FTB is looking for cash to help fund the state of California. Don’t let it be any extra cash that you don’t need to legally give them.
On an e-filing note – California hasn’t finalized some of their forms. They still are accepting “prototype” forms from electronic filing software through tax preparers and packaged software. Make sure you get updated forms when you are doing your own taxes. If you are having problems, let me know. I don’t know if the FTB is accepting by mail any prototype forms yet.
Any tax questions or issues? Drop me a line since it is tax season. I am also taking new clients!
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Kim Isaac Greenblatt
California Estimated Taxes New Split Information