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• Many clergy have asked whether they are subject to a "penalty" if they make only one "estimated tax payment" at the end of a year in lieu of four quarterly payments over the course of the year. A federal court in Montana addressed this issue recently, and agreed with the IRS that taxpayers who are required to use the estimated quarterly tax procedure must pay their estimated taxes (income tax and social security tax) in four equal quarterly installments on April 15, June 15, September 15, and the following January 15. Waiting until the end of the year to pay the full amount of estimated taxes will result in an underpayment penalty for the three preceding quarters, concluded the court. Generally, any taxpayer who is not subject to income tax withholding is required to estimate and prepay both federal income taxes and social security taxes by using the estimated tax procedure. Clergy ...

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  • March 1, 1989

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