Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Prev | Next | Next Thread
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 120797  
Subject: Re: WHEN DO ESTIMATED TAXES APPLY Date: 3/6/2000 11:37 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Read the article in the FAQ on Estimated Taxes, paying special
attention to the portion on safe harbors. If an estimated tax requirement
arises during the course of the tax year, you start making estimated
payments at the next estimate due date, dividing the required payment
by the number of remaining estimated payments.

Phil Marti
Tax Preparer


I beg to differ, but if a requirement arises (such as from a large capital gain) do the following:
1. Increase your withholding only enough to equal last year's taxes (or 108.6% if your AGI was over $150,000) or 90% of this year's taxes, if lower. This extra withholding can be spread out through the year, or paid in a lump as late as December. Or
2. Pay one installment on the installment due date immediately following the event, enough to do the above.
Either of these will avoid a penalty.

If you divide the extra tax libility by the number of installment remaining and pay them as Phil suggests you will almost certainly overpay, and you will incur a penalty on earlier quarters depending on how much you overpay or and possibly later quarters if you underpay, and require completion of Schedule AI to possibly avoid even larger penalties.

Paying an estimate or estimates should be avoided in favor of overwithholding, but if paid must cover the tax liaibilty to date to be effective (not spread out through the remainder of the year), and then requires completion of Schedule AI and calculation of any penalty by the taxpayer to avoid further penalties.
"Tax liability to date" includes accumulative "safe harbors" amounts. Paying 4 equal and on time installments would be O.K. ( as good as withholding) but that only works if the event was in the first quarter. Ed
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Berkshire Hathaway

Reestablishing the Middle Class
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement