How to avoid paying taxs on your leases

Any suggestions on how to avoid paying taxs on your leases, before the 1 Jan rolls around.

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Permalink Reply by Jack Straw on January 8, 2012 at 11:03am

My understanding:

Estimated taxes on 4th quarter 2011 income due Tuesday 17 January (due to 15th falling on weekend).

Not paying estimated taxes (as and when due) could open one up to substantial penalties.

2011 Tax filing due 17 April.

Check out this IRS document:

http://www.irs.gov/publications/p505/ch02.html

 

None of the above should be construed as substituting for the advice of a qualified tax professional.

I would strongly suggest that you consult a tax professional, as soon as posssible,

All in my humble opinion.

 

JS

 

Permalink Reply by Jim Litwinowicz on January 8, 2012 at 9:47pm

JS; I have had two CPAs state that you need to pay estimated taxes based on what you paid the prior year. Say in 2010 you paid a total of $15,000 in federal income taxes. So far in 2011 you have paid only $10,000 due to layoffs or a drop in pay. But your bonus check came in 2011. Then you should pay a little over $5000 by Jan 17th to total what was paid the prior year and avoid any fines.  The balance of all taxes due can be paid by April 17th with no penalties.

This is all what I was advised by two different CPAs. I strongly advise you sit down with your own tax professional to see what is best for you.

Permalink Reply by Elsie Fox on January 8, 2012 at 10:27pm

Thanks for the link, JS.  For my situation, it was quite helpful.  Fortunately (??), I'm poor, so I didn't owe tax in 2010.  So I won't have to make estimated payments on my 2011 lease payment; I'll pay the tax on April 15.  However, since Im getting the other half of my lease payment in 2012, I'll have to make quarterly payments on it, but the first payment isn't due until April 15. 

 

Estimated tax not required.  You do not have to pay estimated tax for 2011 if you meet all three of the following conditions.

  • You had no tax liability for 2010.

  • You were a U.S. citizen or resident alien for the whole year.

  • Your 2010 tax year covered a 12-month period.

  You had no tax liability for 2010 if your total tax (defined on page 21 under Total tax for 2010—line 14b ) was zero or you did not have to file an income tax return.

Permalink Reply by Billy Park Whyde on February 6, 2012 at 2:12pm

Question has anyone asked the IRS how you can make estimated tax payments without first having the money to do so?

Permalink Reply by David Perotto on January 8, 2012 at 11:21am
Gary,
I concur with Jack. On some of my businesses, we lease the land from ourselves. This lease income necessitates paying quarterly taxes, based upon your estimated, annual taxable income. At the end of the year, our accountant then reconciles the estimated payments with the actual, possibly one more payment by April 15th.

With the self directed IRA, your money would be in retirement funds. This, if doable, would avoid current income and delay the income for your later years. The rules are a bit strict to have this type of IRA, but your CPA can advise you if this can be done. Everyone's situation is unique, but some may be able to attempt this.

Hope this helps,
Dave
Permalink Reply by Fun fun fun on February 6, 2012 at 10:22am
Has anybody here used a structured settlement? And who was the accountant you used please? Thanks so much
Permalink Reply by Nelson Roe on February 6, 2012 at 1:49pm

What area are you located in Sandy?  I have spoke to a few CPA's & tax advisors.  Some of them have mentioned using a particular structuring for the taxes.  The ones I have spoken to have been in or around the Canton Ohio area.  If you are anywhere close to this area let me know & I will provide you with their contact info...

Permalink Reply by Fun fun fun on February 7, 2012 at 10:12am
Thanks so much. Canton is fine. If you can just send their name and number. Do you know anybody who has used this? Thks S
Permalink Reply by Nelson Roe on February 7, 2012 at 1:14pm

Hi Sandy, I will inbox you some info now.  Hope you find it helpful.

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