Its that time again.  Quarterly tax payments are coming due soon...!

Normally every year my mom does our taxes together. I use my parents' home address on my W-2's so I don't have to keep changing my address and worry about not getting them or my taxes being late. Normally my mother just has both of our taxes figured at the same time, and I pay her the fee and taxes if necessary. However this year for some reason mine didn't get figured when hers did. I kept asking my mother if my refund had arrived yet. Finally, I frantically started looking for my W-2's and found them in my room at my parents. What is the best thing for me to do since I haven't filed yet??????? I'm really freaking out, because I have now somewhat broken the law.

C.W., Indianapolis  

The policy of "Better late than never" applies here. Go ahead and file your tax return now, even though it's late. The IRS will be happy to hear from you. Because it looks like you are owed a refund, there will be ill effects if you file your return at this time. If it turns out you owe additional taxes, the IRS will assess a penalty and some interest on the amount that you owe.  

I have just started a new business in June and I know that I will need to pay quarterly taxes. According to a recent article of yours, I need to calculate my income for the entire year and then divide by the total number of months that have passed so far. Does this apply since I just started in June? If so, that means that I'll need to divide by 8 months for the 3rd quarter? Please advise.  

S.C., Indianapolis  

This question is well-timed because all of you quarterly estimated tax payers should be thinking about making your September 15 payment. In the case of a new business, you have a couple of options. If you want to come as close as possible to the actual income tax you will owe for the third quarter, you can use the process you described of adding up all of your income for the first eight months of the year, including income from your new business and income from prior employment and subtracting applicable deductions.  

Then divide the net amount by eight to achieve an average monthly income, and multiply that result by 12 to arrive at the estimated income for the entire year. This is the amount on which you will figure your tax for the year, and then divide that amount by four to arrive at your September 15 payment.  

Technically, when you base your estimates on current year income, you are only required to pay 90% of the amount you calculate for the amount due on a quarterly basis. I like to recommend that people pay 100% of the quarterly amount, especially in a year when their income is changing significantly from the prior year, so that they don't get caught short in April.  

Alternatively you can look at last year's tax return and base your estimated payment on last year's income tax. Each quarter you should pay one-fourth of the total tax as calculated on your tax return for 1999. Quarterly payments for 2000 taxes are due on April 17, June 15, September 15, and January 16.

Can you tell me if proceeds received in a class action suit are taxable?  

S.G., Indianapolis  

Generally speaking, proceeds of a class action suit are taxable. There is an exception to this rule and that occurs in the situation where the damages received are specifically designated as being for remedy for an injury.