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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Re: Underpayment of estimated tax Date: 10/27/1999 10:06 PM
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BladeXrunners:

I should have said, "you don't even have to do the AI to realize there's no penalty". I don't know why anyone would go out of their way to owe penalty on an AI if they are exempt otherwise, however, you said:

Because there is tax due, you can't use the Regular Method of equal installment payment of $0
each. Hence, you're force to either use the uneven payment or the annualized payment. In both
case, you would be penalized.


and You may only consider 90% of the tax for safe harbor for the <whole> year if the estimated tax
is in even installment or in one-lump sum on the previous April 15. For all other situation, it is
per period. So in the above example, the IRS will disagree with edcosoft--if you use the AI
Annualized Method, there will be a penalty regardless of what the year tax is.


I don't know what you mean " by period" but if you just put the figures on page one of 2210 you'll see what I mean. You don't even need our Quarterly Installment Tax Calculator to do this. But specifically, the estimated tax is (in this case) in even installments of $0, or more specifically, of no concern. The safe harbor comes from deducting withholding from tax due and if you owe less than $1000 or it's more than 90%, you made it, or if you deduct it from last year's tax and it is less than $0 remaining, no penalty.

Even if there were uneven installments it doesn't keep you from satisfying a safe harbor, it's just that you can't use installments to satisfy a safe harbor that allows you to not even file a Forn 2210.

The 4 equal installments only allow you to meet the no penalty safe harbor at Line 18 without filling out the Regular Method of Form 2210, and if you fall short, figure the penalty on the Short Method. Ed

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