Discussion:Payment by LARGE check

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Discussion Forum Index --> Basic Tax Questions --> Payment by LARGE check

Discussion Forum Index --> Tax Questions --> Payment by LARGE check

Joan TB (talk|edits) said:

4 April 2014
Is there a limit to the amount that a TP can pay by check for 1040 taxes owed? My client literally won $2m at the slot machine and will owe about $800K in taxes. We figured the minimum she could get by on ES payments to avoid penalties and then pay the remainder by 4/15/14.

Ckenefick (talk|edits) said:

4 April 2014
Is there a limit to the amount that a TP can pay by check for 1040 taxes owed?

Not that I know of. I have a few extension payments that will go out today that will be in the millions...

Captcook (talk|edits) said:

4 April 2014
I actually wrote out a 7-digit check for a client once. He included a blank (and endorsed) check with his tax information every year for this purpose, despite our request that he not. That's the most nervous I've ever been writing a check...and it wasn't even my money. Didn't have any problem going through.

Joan TB (talk|edits) said:

4 April 2014
Thanks. Since my client has never had this kind of money before, this is a big deal for her, and she wanted me to "find out". Right now, we are talking about e-pay through Lacerte. Lacerte confirmed for me (via chat, for which I requested the chat transcript) that they do not charge a fee for e-pay with e-file. Anyone else use that? Any issues?

Smokeytax (talk|edits) said:

4 April 2014
I've mailed in checks for clients for over a million dollars with no problems.

You know what - I would avoid e-pay and instead send the check in by certified mail requesting a return receipt, which you can assure your client you have "found out" is the method that has been tried and true.

Joan TB (talk|edits) said:

4 April 2014
Smokeytax - good point! I don't think she is too thrilled about letting the IRS draft on her account anyway.

Ckenefick (talk|edits) said:

4 April 2014
Wish I could have seen the look on your client's face when she won that $2m.

Ckenefick (talk|edits) said:

4 April 2014
Those are truly magical moments:


Tax Writer (talk|edits) said:

4 April 2014
No issues, there is no limit on how much a taxpayer can pay by check to the IRS.

The limits exist for entities only, although some states now assess penalties for paying by check if the amounts exceed certain thresholds.

CA being a notable example, where they will actually send notices requesting a check, and then assess a penalty if the taxpayer pays by check (not making that up).

Death&Taxes (talk|edits) said:

5 April 2014
If you build it, they will come.

Jake (talk|edits) said:

13 April 2014
I hate California!

Gazoo (talk|edits) said:

14 April 2014
With a check of this magnitude, I think it would be worth hiring a calligrapher, engrosser or penman to give the instrument some style. A checque such as this should be written with some amount of flourish to make the little man feel worse than he already does.

Smokeytax (talk|edits) said:

15 April 2014
Here's something funny that happened here. Client pays me to write his extremely large tax checks. So, having a bad day, I write $398,000 on a check as the number but three hundred ninety-eight as the words, omitting "thousand".

As we all learned about negotiable instruments in Business Law 101, the words govern, so IRS cashed it as $398.

The underestimation penalties were going to be on the order of $6,000, which I really was responsible for. BUT, client was paid a multimillion dollar year end bonus, so I was able to file 2210AI showing the bonus as Q4 income but the withholdings attributable to all 4 quarters, resulting in no underestimation penalties.

Lovely thing about the client is that before the problem went away, he wouldn't hear of me compensating him for the penalty.

Happy April 15, everyone!

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