Withholding question
MZB
This year, say I withheld $12000 but due to capital gains and other
dividend/interest I owe $1500. in taxes.
Will I get hit with interest and penalties and will I be REQUIRED to do
estimated tax payments? (Am I in liable for underwithholding?)I anticipate
that 2007 was a unique situation for me and I expect to owe much less or get
a refund in 2008.
Paul Thomas, CPA
"MZB" <m...@noway.prudigy.net> wrote
> Let's say last year my federal tax was $10000 and I got a refund.
>
> This year, say I withheld $12000 but due to capital gains and other
> dividend/interest I owe $1500. in taxes.
>
> Will I get hit with interest and penalties
Not if the underpayment is paid by the original due date of the return
(April 15th in most cases).
> and will I be REQUIRED to do estimated tax payments?
Whether or not you are required to make extimated tax payments can only be
determined at the end of the year. If you cover current year taxes through
withholding, then no estimated tax payments are due. However, if you are
short on the withholding, and no other exception applies, then you should
have made estimated payments and penalties for not doing so may be applied.
> (Am I in liable for underwithholding?)I anticipate that 2007 was a unique
> situation for me and I
> expect to owe much less or get a refund in 2008.
Then I would suggest to not make any estimated tax payments - but - monitor
your situation carefully to be sure you don't owe. Check federal and state
separately.
--
Paul A. Thomas, CPA
Athens, Georgia
MZB
I seem to recall it is 90% of current tax liability OR 100% of previous tax
liability or something like that.
I can't seem to find out the rule.
Mel
"Paul Thomas, CPA" <paultho...@bellsouth.net> wrote in message
news:Gstlj.61299$N67....@bignews5.bellsouth.net...
Katie
> I guess I'm confused on what the withholding rules are.
>
> I seem to recall it is 90% of current tax liability OR 100% of previous tax
> liability or something like that.
>
> I can't seem to find out the rule.
>
> Mel
There is no penalty for underpayment of estimated taxes if you have
paid (in withholding or quarterly estimated tax payments, or a
combination) the lower of 90% of your current year tax liability
(which you won't know for sure until the end of the year) or 100% of
your prior year tax liability. However, if your AGI in the preceding
year was more than $150,000 ($75,000 MFS), the prior-year safe harbor
is 110%.
Estimated taxes must be paid quarterly through the year. Taxes
withheld from wages are presumed to have been paid ratably over the
year, even if more is withheld in some periods than in others. If you
have an item of income that arises at a particular date (e.g., a gain
on a sale of property) that results in an underpayment penalty, you
can use an annualized method to mitigate or eliminate the penalty.
Ref: IRC Sec. 6654(d); also see the instructions for Form 2210,
http://www.irs.gov/pub/irs-pdf/i2210.pdf.
Katie in San Diego
The foregoing is intended for educational purposes only and does not
constitute legal or professional advice. Nothing contained herein is
intended to be used, or can be used, by any person to avoid penalties
that may be imposed under federal or any state law.
phil scott
congratulations..it is people like you, driven by fear because they
have something to lose, and paying like slot machines that keep the
ball in the air ..... as net taxation decimates the rest of the
nation.. those of course no longer give a rats ass.
.when govt comes to seize what they have, or take their small business
that used to employ others, people who used to be able to pay taxes
also. not any longer. that goes under too.
One of the IRS manuals advises agents that everytime they put a
business under for non payment of taxes, it improves the economy since
'someone has to do the work'...... one might remind them of
Bangladesh ....and the bario's in the US.
the 'work' does not actually have to get done.... an entire culture
can be driven to ruins by taxing progress to the point that it
fails. Congratulations to you and those like you though... good
fight... without you our civil servants would not be able to retire at
90 to 100% of last years pay in many cases (police, fire and prison
guards...actually these retire after using 'spiking' tactics to drive
retirement pay (at age 51) well over $100,000.... a few dozen of
gracious folk like yourself can pay for one of these.
Phil Scott
MZB
I think you are in the wrong newgroup.
You want alt.support.f-assholes
"phil scott" <ph...@philscott.net> wrote in message
news:5ed6fc40-ccc5-44a7...@d21g2000prf.googlegroups.com...
phil scott
> Phil:
>
> I think you are in the wrong newgroup.
>
well.... you have provided an accurate personality assessment.
Not-withstanding that however, my remarks are accurate...and my
congratulations stand. and I mean it. It is folk like you
who are keeping the boat afloat.
Phil Scott
Katie
>
> I think you are in the wrong newgroup.
>
MZB -- try asking your questions over on misc.taxes.moderated rather
than here. Phil and his ilk are blocked there. Not so much
underbrush to slog through.
Katie
phil scott
thats fine... you should block anyting that offends you... that works
well when you are right in your judgement, and is terminally costly
when you are into correct....
in either case perfect justice results.. . as usual self admistered in
the final analysis. Same with the Darwin Awards... each earns his
own. Best of luck in your own endeavors.
Phil Scott
phil scott
>
> - Show quoted text -
err Katie, you babe, my gratitude to MB was genuine... I am truly
grateful to those in that class... so is govt.
and all of civil service, and probably 99.9% of those on Social
Security.... I was just pointing out that when taxation crosses the
threshold to 'over taxation', such taxation destroys its host
nation.... not the fault of the taxpayer either. My congratulations
are genuine and still stand.
Phil Scott