I usually pay my estimated taxes in late December. I forgot to do that this year, and now the deadline for filing the fourth quarter estimate has passed. I should have pre-paid roughly $1,000.00 in California state taxes and $1400.00 in Federal taxes. Is it too late to pay the estimated tax? Do I need to wait until I file the yearly return then pay the piper?

Also, my wife was off work for three months due to a medical condition, for which we filed State SDI (employer pays as well as California State SDI), but did not file a workman's compensation claim. Is the income she received for those three months taxable? Our combined income for 2002 was about $135,000.-$140,000.

-Perplexed taxpayer

Dear Perplexed,

Pay the estimated income tax now. The penalty for paying estimated taxes late is actually a daily simple interest charge. The more days the tax is late, the more days of interest you pay. So, the sooner you pay the bill, the lower your interest and penalty will be.

About your wife's income while she was out of work: If she had been collecting workman's compensation, the income would not have been taxable for federal purposes. But most other payments received from disability or medical plans paid for the employer are included income.

If both the employer and the employee pay the cost, then the benefits are taxable only to the extent that they are due to the employer's payments. For additional information, see IRS Publication 525, Taxable and Nontaxable Income. It's available for download at the IRS web site at: www.irs.gov.