Do you wonder what Trump meant by "prepaying his taxes"?
When people have investments, are retired or in business for themselves (IE: don't go to a job where they are paid a salary by a boss), they pay estimated taxes, quarterly. that is every quarter, they pay what the accountant determines they will likely owe, based on what they had earned in the prior year. They are allowed to make up any difference at the final tax payment (in April) as long as the difference is not too great. They need to do a pretty good job estimating (and prepaying) their taxes.
You can also apply any refund from the year, towards paying what you owe the next year. If you have a good CPA, your refund will not be huge, because they will have balanced it out so that you aren't overpaying that much. but, it is always better to pay a little more than too little tot he IRS because they will hit you if there is too much difference.
@a Hunch that sounds smart. So he can save 9% state tax. He is a sharp guy.
@slickterp. Yes, I know prepaying isn't the same as estimated, but how is it that he isn't paying, then? I guess I don't understand your comment. I usually end up paying extra over the year in estimated, but I tell them to apply it tot he next years' taxes. Hey, I'm just a little guy, though, so it isn't that much and I always thought if you were doing it right (or in my case, the CPA) that you won't have paid too much more.
Yes, paying quarterly is what a lot of us who are retired do. That is why I am wondering if that is what Trump was referring to. If I pay too much, I don't bother with a refund, I just let them take it off the first installment of the next tax bill.
IF YOU HAVE A GOOD CPA, YOU DON'T HAVE A HUGE DIFFERENCE. They know how to make it even out.
- RICKLv 71 month ago
Many people pay quarterly aka pay in advance. I do it on my rental income. Other people overpay and instead of getting a refund carry it over to help pay the next years, this is popular with people who's income fluctuates greatly year to yeay..
- LLv 51 month ago
Recently, are article appeared from a Mark Drake and this is what it said; I decided to actually read the entire NYT article on Trump taxes and it literally says he filed extension in 2016/2017, pre-paid $5.2 million, ended up owing less, left the money with the IRS for future payments and only had to pay $750 first two years in the White House because he already overpaid in the previous years.
- SlickterpLv 71 month ago
Prepay means you pay extra one year in anticipation of owing the next year. Prepaying and paying estimated is not the same. Anything overpaid is just a refund. Prepaying isn't actually paying taxes (though it might be).
- A HunchLv 71 month ago
No, I don't wonder what Trump meant.
I know a lot of sole proprietors and individals who have significant investments who don't file estimated taxes and instead pay the penalty for being under withheld.
People who understand taxes and have fluctuating income usually do not get refunds even when they are eligible for it. Instead they roll over the refund to the next year. On your 2019, you can specify this on line 22 of the 1040.
- this avoids the refund being taxed at the state level, which saves Trump almost 9%. More than he would be earning if he had the money in his hot little hands.
Depending on the year, they may also submit estimated taxes.
What did the NYT article say that trump had in his account? $5m? $7M?? don't remember.
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- ErikLv 71 month ago
Just more lies. It's been FOUR YEARS, with him telling the American people "I'm going to show them to you". Only if the courts make him!!!
- babyboomer1001Lv 71 month ago
This was already competently answered. MOST people prepay their taxes and they get back any over-payment.