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<< I recently read in here (or somewhere via a link that was posted in here) about something called a rule 1 exemption that related to someone who was w-2 part of the year and then switched to 1099, as it relates to filing of estimated quarterly taxes. I searched the IRS site and cant find the specifics of it, and the search engine on TMF appears not to index current documents. Can someone provide me a pointer to this info again please? My accountant has never heard of it. >>

I suspect you're talking about exception one to the estimated tax penalty: if you have at least as much withheld this year as your tax was last year, you won't be subject to an estimated tax penalty for this year, no matter how much you owe when you file (as long as last year's AGI was under $150K).

Read the article in the FAQ on estimated taxes. I'm not aware of any special rule for people whose employment status changes during the year.

Phil Marti
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