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. Are we just lucky to have made the bulk of income in the first quarter and won't
have to pony-up for all those taxes until it catches up with the equal and timely
payments of the later quarters?

That's exactly correct. However, if your W-2 income stops and you have to make it up with more 1099 income in later quarters it will leave you with underpayments in the first quarters. The penalty is only simple interest on the underpayments at 6%.


Maybe I'm misinterpreting, but it sounds to me like you're saying that something happening later in 2002 could upset the prior year safe harbor payments that were made in time for the 4/15/2002 ES deadline. I don't see how that could happen. Of course, if anticipated withholding didn't happen later in the year, ES payments would have to be increased to take up the slack, but the withholding could be applied to the 2002 payment schedule under the actual date rule, thus leaving the taxpayer free from penalty.

Phil Marti
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