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Financial Planning / Tax Strategies
|Subject: Re: Under Payment Penalty Help!||Date: 3/13/2000 2:33 AM|
|Author: pmarti||Number: 31596 of 125696|
<< It is my understanding that a waiver can be requested for under payment. Would the two reasons sited below be valid reasons to have the penalty waived or reduced:
1) My 1999 taxes withheld were less than the prior year's taxes paid because I took a new job in 1999 that paid about $20,000 per year less than my 1998 salary. This is why my '99 withholdings were not as much as my '98 taxes paid.
2) I converted my $48,000 IRA to a Roth in 1999...this is primarily where the '99 taxes due (underpayment) stem from. >>
IRS Publication 505 covers the waiver. Unlike other penalties, the ES penalty is not covered by a general "reasonable cause" exception. The waiver authority is specific, and your situation doesn't fall into it.
Depending on when the Roth conversion occurred, you may be able to reduce the penalty with the annualized income method. See Form 2210 and its separate instructions.
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