If an individual is required to make quarterly instalment payments on their income taxes, list 3...

If an individual is required to make quarterly instalment payments on their income taxes, list 3 ways to calculate them.

Expert Solution

We have three options to choose from to calculate our installment payments:

No-calculation option: This option is best if your income, deductions, and credits stay about the same from year to year.

We will give the no-calculation option amount on the installment reminders that we will send you. We determine the amount of your installment payments based on the information in your latest assessed tax return.

Prior-year option: This option is best for you if your 2020 income, deductions, and credits will be similar to your 2019 amount but significantly different from those in 2018.You can determine the amount of your installment payments based on the information from your tax return for the 2019 tax year. If you use the prior-year option and make the payments in full by their 2020 due dates, we will not charge installment interest or a penalty unless the total installment amount due calculated by you is too low.

Current-year option: This option is best for you if your 2020 income, deductions, and credits will be significantly different from those in 2019 and 2018.You can determine the amount of your installment payments based on your estimated current-year (2020) net tax owing, any CPP contributions payable, and any voluntary EI premiums. If you use the current-year option and make the payments in full by their 2020 due dates, we will not charge installment interest or a penalty unless the amounts you estimated when calculating your total installment amount due were too low.

ekkarill92 answered 1 year ago

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