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Estimated Tax Computation

With the market in the toilet, and much of my income from dividends and capital gains distributions, how are members computing their quarterly estimated tax for 2020? No one has mentioned extending the 4/15 deadline yet.


  • In another thread, I wrote that according to IRS guidelines, taxpayers are allowed to defer their first quarter estimates until July 15th, though their second quarter estimates are still due a month earlier, on June 15th.

    As to what I will be doing - likely paying the same estimates as always, since I periodically do Roth conversions. Each year I select the amount to convert such that my total taxes remain fairly constant. Generally that means doing some conversions early in the year and leaving some until the end of the year when I have a good sense of expected dividends.
  • Thanks for your reply, but what is your "sense" of what to expect in the way of dividends and capital gains distributions for 2020?
  • OXY has already cut their dividend; BA is expected to cut their dividend. I suspect APA will also cut their dividend. Depends on what segment you are looking. The oil sector and air lines will probably see cuts.
  • edited March 2020
    TheShadow said "The oil sector and air lines will probably see cuts." Bankruptcies here are also a strong possibility.
  • I'm reviving this thread to ask the community their feeling about 2020 CG & Div distribution estimates compared to 2019. Higher - Lower - Same? The July 15 deadline for 1st and 2nd quarterly estimated tax payments is approaching and I'd like to be in the ballpark. I have Vanguard, FIDO, and TRP, but no specific sector concentration. The market looks a lot different now than it did back in March.
  • The IRS has indicated that the first and second quarterly estimated tax payments for 2020 may be combined into one single payment due by July 15, 2020: who owe a 2019,combined into a single payment.
  • @bilvihur: It May be that some mangers of funds you own did some ill-advised selling when the markets went south. Those sales could result in higher distributions come December, but I doubt that information is available now. Who knows if some funds will reduce dividend payments. I will be writing a fat check July 15 and I’m preparing for that.
  • There's always the option of filing Form 2210 Schedule AI with your tax return. This lets you pay estimates based on the income you actually made each "quarter", rather than paying the same amount on each estimate.

    Regardless, you never have to get ahead of yourself and pay higher estimates YTD than you would have had you paid 1/4 of your taxes on each estimate.

    Using this form entails keeping pretty good records about what income (including investment income) you received when. I did this for a few years. But I haven't since interest rates on cash dropped so low that it's no longer worth the effort just to defer paying a few bucks for some months.

    Nevertheless, this method is available as a backup in case you get hit with a lot of 4th quarter income.
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