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Filing Early in Lieu of Making Last Payment

There is a special rule in the tax law that excuses you from filing fourth quarter estimated taxes if you file your annual tax return (Form 1040, etc.), and pay any tax due by January 31.

Example

Example

Stella, a self-employed individual with no tax withheld, does not make an estimated tax payment for the fourth quarter of 2014, but files a Form 1040 and pays the tax due as shown on the return on January 21, 2015. Although she did not make a fourth quarter payment of tax, she is excused from making the fourth quarter payment because she filed her return on or before January 31, 2015, and paid the full estimated tax amount due. Otherwise, she would have had to make a fourth quarter estimated tax payment by January 15, 2015.

You may be asking: "Why file early?" Some of the advantages of filing your annual return by January 31 include:

However, there are pitfalls to filing early:

Of course, even if you think it's a good idea, filing early isn't always possible due to factors beyond your control. You may not have received documents that must be attached to your final tax return (Form W-2 for example). Or, if you are a partner or S corporation shareholder, you may not have received Schedule K-1s, containing important tax information needed to complete your annual return. Finally, as a self-employed individual, you simply may not have had sufficient time to compile the tax information needed to complete your Schedule C, which must be included with your annual return when you file.


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