estimated tax vouchers for 2011
Asked Feb 25, 2011, 02:52 PM
I filed 2010 Fed and State returns, the reports my tax consultant gave me has Fed and State estimated tax vouchers for 2011.
I'm employed, and most of the income is the salary, though there is a bit from rental property. In 2010 I sold some stock options and ESPP, hence I owe some money (>$2000) to IRS (which I paid with the return). Previous years, I got the refund, so tax withheld is more than what I owe.
My question is can I adjust my tax withholding at payroll (file a new W-4), and not pay IRS/State the estimated tax as per vouchers? Or is it mandatory to pay IRS/State as per vouchers.
As per my tax consultant, I can do more tax withhold at payroll and not pay estimated tax. Want to double check before I make that change and not send estimated tax to IRS/state.
As per IRS http://www.irs.gov/businesses/small/article/0, id=110413,00.html
If you receive salaries and wages (TRUE IN MY CASE), you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings. To do this, file a new Form W-4 (PDF) with your employer. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.
You do not have to pay estimated tax for the current year if you meet all three of the following conditions.
* You had no tax liability for the prior year (NOT TRUE IN MY CASE)
* You were a U.S. citizen or resident for the whole year (TRUE IN MY CASE)
* Your prior tax year covered a 12 month period (TRUE IN MY CASE)
The above 2 paragraphs confused me a bit, the first para says I do not need to pay, and as with second paragraph I do not meet the first bullet point.
If making new W-4 to withhold more taxes at payroll work for IRS, does the same work for State of California as well? Please suggest.
Thanks in advance.