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Is it legitimate to include foreign tax credit on the 2018 estimated income / taxes worksheet even if it means no quarterly payments in 2018 (we paid quarterly in 2017)?

Our income for 2018 and taxes to be paid will be less than 2017 because our Canadian RRIF payments have been reduced and we will not have mutual fund redemptions as was the case in 2017.  With the 2018 higher personal exemption and our reduced income along with paying foreign taxes means our quarterly estimated tax payments would be NIL.  We are concerned this might cause IRS to either be more likely to audit 2017 or at least require a detailed explanation of why we would claim to not have to make 2018 quarterly tax payments.

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pk
Level 15
Level 15

Is it legitimate to include foreign tax credit on the 2018 estimated income / taxes worksheet even if it means no quarterly payments in 2018 (we paid quarterly in 2017)?

If  computations of tax liabilities for the year 2018 ( taking into consideration tax law changes, income and other facts and circumstances ) shows you would be sufficiently withheld  ( i.e. within 10%  or less of expected liability ) then there is no requirement to make estimated payments.  IRS generally does not audit  based on estimated payments.  However, I would suggest you keep track of your  expected liabilities through out the year and make any estimated payments  when and if  necessary or make sure to be upto date  by the 15th of Jan 2019.

The above is negated  if the IRS has sent you any notice  requiring you to pay estimated payments quarterly -- then you got no choice without negotiating with the IRS

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pk
Level 15
Level 15

Is it legitimate to include foreign tax credit on the 2018 estimated income / taxes worksheet even if it means no quarterly payments in 2018 (we paid quarterly in 2017)?

If  computations of tax liabilities for the year 2018 ( taking into consideration tax law changes, income and other facts and circumstances ) shows you would be sufficiently withheld  ( i.e. within 10%  or less of expected liability ) then there is no requirement to make estimated payments.  IRS generally does not audit  based on estimated payments.  However, I would suggest you keep track of your  expected liabilities through out the year and make any estimated payments  when and if  necessary or make sure to be upto date  by the 15th of Jan 2019.

The above is negated  if the IRS has sent you any notice  requiring you to pay estimated payments quarterly -- then you got no choice without negotiating with the IRS

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