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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 121150  
Subject: Re: Income tax questions Date: 10/9/1999 2:30 PM
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If I don't sell any stock all year, and I sell a heap a nearing the end of the year, do I need to
make a quarterly estimated tax payment?


That depends. If your WITHHOLDING is equal to last year's tax (105% for hi income) NO. If not, if you increase your withholding so it is enough, NO. Otherwise, Yes, but only up to the amount of last year's tax, but be prepared to file Form 2210 with Schdule AI (which TurboTax will do for you if you have the quarterly info). In your case, being at the end of the year you DON'T want the Regular Method of 2210 as that will average your gain over the entire year.

Did I need to make estimated payments throughout the
year??


No. Only if your withholding this year wouldn't cover last year's taxes, then making 4 quarterly equal and on time installments would have made up the deficiency in withholding, but overwithholding in December the amount of those 4 installments would have accomplished the same thing.

Also, someone said that even if you meet the safe haven of withheld taxes, you still need to pay
interest (about 8%) come April 15th. Is that right?


Only if you technically missed or misunderstood what a safe harbor was. In your case if you incurred $10,000 of tax liability in the last quarter for your gain and paid the $10,000 as an estimate on 1/15/00 because your taxes in 1998 were $10,000 more than your withholding in 1999, it *appears* you met the safe harbor, but didn't. Then if you complete the Schedule AI, but let the IRS figure your penalty, they would figure it on the Regular Method and you would have a penalty on a $2,500 underpayment for all three first quarters. If you figured the penalty on AI, no penalty.

Most of my ignorance about taxes fall around these issues. Is there a good reference (book) that
I can use to educate myself?

- BlueAdept


IRS Publication 505, IRS Form 2210 and its Instructions, and the free demo on www.edcosoft.com.

Ed
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