Any Penalty on Under Withholding if Under $1000?

[njoracle]

For 2015, my monthly withholding total for all of 2015 on my 1099-R will be
about $3800 but my tax due will be about $4200. The estimated difference between
tax withheld and tax owed will be about $400. My understanding is there is no
penalty charged as long has the difference between withheld and owed is less
than $1000.

FWIW, last year (2014) my withholding was about $6000 due to higher income so
this year I won't qualify for the Safe Harbor of Withholding 100% of last year.

Am I correct in thinking that there will be no penalty as long as the difference
between tax due and amount withheld is under $1000?

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[Barry Margolin]

In article <muchjq$pa1$1...@dont-email.me>,

njoracle <njor...@invalid.domain> wrote:

> For 2015, my monthly withholding total for all of 2015 on my 1099-R will be
> about $3800 but my tax due will be about $4200. The estimated difference
> between
> tax withheld and tax owed will be about $400. My understanding is there is no
> penalty charged as long has the difference between withheld and owed is less
> than $1000.
>
> FWIW, last year (2014) my withholding was about $6000 due to higher income so
> this year I won't qualify for the Safe Harbor of Withholding 100% of last
> year.

Your 2014 withholding is irrelevant. The safe harbor compares your 2015
withholding with your 2014 total tax liability.

>
> Am I correct in thinking that there will be no penalty as long as the
> difference
> between tax due and amount withheld is under $1000?

That's correct as long as you haven't made any estimated tax payments in
2015.

Also if your 2014 withholding + estimated taxes are at least 90% of your
2015 tax, there's no penalty.

--
Barry Margolin
Arlington, MA

[njoracle]

Barry Margolin wrote:
> In article <muchjq$pa1$1...@dont-email.me>,
> njoracle <njor...@invalid.domain> wrote:
>
>> For 2015, my monthly withholding total for all of 2015 on my 1099-R will be
>> about $3800 but my tax due will be about $4200. The estimated difference
>> between
>> tax withheld and tax owed will be about $400. My understanding is there is no
>> penalty charged as long has the difference between withheld and owed is less
>> than $1000.
>>
>> FWIW, last year (2014) my withholding was about $6000 due to higher income so
>> this year I won't qualify for the Safe Harbor of Withholding 100% of last
>> year.
>
> Your 2014 withholding is irrelevant. The safe harbor compares your 2015
> withholding with your 2014 total tax liability.
>
>>
>> Am I correct in thinking that there will be no penalty as long as the
>> difference
>> between tax due and amount withheld is under $1000?
>
> That's correct as long as you haven't made any estimated tax payments in
> 2015.
>
> Also if your 2014 withholding + estimated taxes are at least 90% of your
> 2015 tax, there's no penalty.
>

I always use withholding and never use estimated taxes and will be above
90% and less than $1000 so I should be okay. Thanks for responding.