Oh, if wishing made it so.
With the third quarter Estimated Tax deadline safely behind us (it was last Thursday, the 15th) our thoughts turn to the madness of the uneven deadlines.
You remember when they are, right?
I beat this expired equine mammal into the ground on a frequent and continuous basis, but let’s go over it again:
For those who do not have withholding from their incomes by an employer that will owe at least $1,000 in tax for the current year the deadlines for four payments are the 15th (or the next business day if on a weekend or holiday) of:
🗓️ April
🗓️ June
🗓️ September
🗓️ January of the following year
The payments can be equal and based on the previous tax year, or annualized.
That last thing means basically that the amounts can be based on the actual income during the period you’re paying for.
Look at the months again. 4, 6, 9, 13. No logical sequence, and certainly not quarterly.
What the actual hell?
Is the reason truly an unsatisfying version of, “That’s just the way it’s always been?”
Nope.
In fact, according to a CPA that posted an answer to this question 3 years ago on a forum, the shift happened in the “60’s.”
No clue what actual year. Or who in particular was responsible.
I dug and dug. The IRS isn’t telling, and I cannot find any other history on the subject either.
Madness. But the answer he provided made just enough sense to be believable, so we share it here.
For a little background first, did you know that your federal government, proud sponsors of the U.S. Congress and the I.R.S. (their evil puppet) has a fiscal year that begins on October 1st?
Not the calendar year, but October 1 through September 30.
All the bad noise on the news that happens when the President decides not to sign a budget in January actually occurs during a period of omnibus spending during a continuing resolution that basically proceeds with the previous year’s parameters through December 31st.
Yeah, that bothers me, too. Especially when it’s held up for something that does nobody any good, and sends thousands of powerless federal employees home without any money for their families.
But I digress (for a change!).
The federal fiscal year begins the first day of October, not January. A given.
The explanation for the shift from what we’re told was strict quarterly payments the 15th of the following quarter, or mid-October, to mid-September, was due to the desire for the influx of funding that occurs when Mr. & Mrs. Joseph P. Taxpayer cough up by the millions.
A desire for some last-minute cash before year’s end.
It makes just enough sense that I can believe it.
And as time allows, I’m going to get to the bottom of the actual chronology of this thing, including dates, notable names, all of it.
I don’t have to know, but I’m in love with the quest for interesting and useless trivia.
October and July were both shifted back one month, even though April was left alone for what could be said to be obvious reasons.
April 15th is already 1040 Tax Day, and nobody’s going to be thinking about payment in March.
Plus, you really do need to let at least 3 months elapsed time before that first payment. You know?
My opinion, but it makes sense to me.
I do have a solid answer for the next question you may be thinking to ask, in case you didn’t know:
How in the hell do you make 4 equal payments when the deadlines aren’t evenly spaced?
Answer:
If you’re basing your payments on 100% of the previous tax year in equal installments it doesn’t matter anyway, but if you’re not, you base it on the number of actual full months elapsed prior to the deadline in question.
🗓️ April = January through March
🗓️ June = January through May (less the 1st quarter payment)
🗓️ September = January through August (less the 1st & 2nd quarter payments)
🗓️ January of the following year, and now you know the whole story for the year.
Have you ever come across the story of the deadline shift on a website or in an article I have yet to discover?
Please do share if you can put your hands on it!
Just drop us a link, and we will sing your praises, and our thanks publicly.
Promise.
Until next time, stay safe, live long and prosper…
…and let’s have an amazing 4th quarter, everybody!