•If you haven't filed your 2007 taxes yet, apply this year's refund to next year's taxes. That's a good strategy for taxpayers who expect to receive a bonus or to sell investments this year, Carter says. Even if your refund doesn't cover the entire amount of tax you'll owe, she says, you'll still reduce the amount of your quarterly installments.
The easiest way to calculate your estimated taxes is to figure out how much you'll owe, divide it by four and send in your payment before each quarterly deadline (see box).
That can be a challenge, though, for self-employed taxpayers whose income tends to fluctuate. In that case, you can use an annualized method that lets you match payments to your cash flow.
The rules are complicated, though, so it's a good idea to consult an experienced tax preparer.
About that rebate
Under the economic stimulus package approved this year, most taxpayers will soon receive a rebate of $300 to $600, or $1,200 for married couples.
Several readers who pay estimated taxes have asked whether the rebate will affect their payments for 2008.
The answer is no. The rebate won't be treated as taxable income, so it won't affect the amount you owe when you pay your installments, says Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants. But you can't ask the IRS to apply your rebate to an estimated payment due June 15.
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