Members of the Maryland Association of Certified Public...

Tax questions

March 11, 1998

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: I'm going to have to pay estimated state and federal taxes for the coming year and I'd like to know how I start. Do I apply to the tax services or can I just send a check in?

A: In order to pay estimated taxes, you must obtain IRS Form 1040-ES and Maryland Form 502D. For federal tax forms, call 1-800-829-3676 and, for Maryland forms, call 410-767-1985. The next step will be to determine the amount of taxes you will be required to pay. You can either project your 1998 federal and state taxes and pay 25 percent each quarter (the due dates are April 15, June 15, Sept. 15, and Jan. 15, 1999) or you can pay in enough to avoid underpayment penalties and pay any additional tax that might be due when you file your returns in April of 1999 for 1998.

In order to avoid underpayment penalties, you must meet any one of several tests. The first test is to pay in an amount quarterly that will result in your having paid in at least 90 percent of the eventual 1998 tax shown on your 1998 return. Alternatively, for 1998 taxpayers can base their estimated taxes on an amount equal to 100 percent of their 1997 tax liability.

Generally, your quarterly estimated tax payments will be equal However, if your income is not received evenly each quarter, you may be able to increase or decrease the payments based on the amount of income actually received during the quarter.

James C. Wagenmann, CPA, Watkins, Meegan, Drury & Co. LLC The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

To ask a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. Call 268-7736 in Anne Arundel County, 836-5028 in Harford County, 848-0338 in Carroll County. Using a Touch-Tone phone, punch in the four-digit code 6225 after the greeting. You can also submit questions by e-mail through The Sun's Web site: www.sunspot.net/tax.

Selected questions will be answered in the Business section. No questions will be answered personally.

Pub Date: 3/11/98

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