The most common question that I have been asked in the past month is,
“What should I do with my estimated income tax payments for 2018 in light of the new income tax laws?”
The answer that I usually give is,
“Relax and do nothing differently than in 2017. For most people, the new income tax laws gave you some benefits and took away some benefits and in the end, there will be little noticeable change in your income tax return for 2018.”
However, there are a few circumstances when you may want to act to prevent a problem at the end of 2018:
- You had a large refund or amount due for 2017. Then I would suggest that you change your income tax deductions or estimated income tax payments accordingly. You can increase or decrease your deductions at work or you can increase or decrease your quarterly remittances.
- You anticipate a significant change in your income or deductions for 2018. By this I mean that your income or deductions will change your taxable income by more than 20%. As soon as you become aware of this change, I recommend that you contact your financial adviser and income tax accountant and determine what changes you should make to your estimated income tax payments for 2018.
If you don’t have one of these two situations, I would strongly recommend that your 2018 estimated income tax payments be the same as 2017. That is you should end up paying the same amount in 2018 as you paid for 2017.
Be sure to make all your quarterly remittances on time. As difficult as this may be, it is far less painful than having a big tax bill when you file your income tax return.