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Subject:  Re: 2003 Tax liability guestimate Date:  8/10/2003  12:41 PM
Author:  edcosoft Number:  66437 of 133106

fleg: You don't have to worry about penalties if you paid in more this year than last year's tax UNLESS you paid less in early installments. So, unless you are going to use the Annualized Income Method paying more in later quarters is a waste of money. IF your income has a lot of stock dividends you should have been able to REDUCE your second installment. I suggest you either:
1. Go to the free H & R block tax estimater site I gave a link to in a previous comment in this thread and see if you met either the 90% of current year's tax safe harbor, or the 100% of last year's tax safe harbor (110% if your AGI was over $150K last year) in each quarter. You can carry overpayments ahead to satisfy future installments, but NOT back to cover previous shortages. Also the "within $1,000 of this year's tax" safe harbor is no good if you paid any installments. This might work for you because you can use the post-May 6 rates for all your installments with these "safe harbors".
OR, 2. Use the QITC link for a similar free full year estimater to do the same thing,
OR, 3. Use the QITC link for a Annualized Income Method calculator. This might be better for you because your income increased in later quarters. But when using this method (now to figure it, or with your return next April) you'll have to use the pre-May6 rates and rules for the first installment because the law wasn't passed when your first installment was due. If you underpaid the first installment there is nothing you can do about it now except to increase withholding which is usally averaged over all 4 quarters. You can compute the first instalment free, but must register ($18) your demonstrator to compute the 2nd, 3rd and 4th installments.
I strongly suggest you at least get a form 2210 and Schedule AI and instructions from the web site and read and understand how this works. The 2100AI will be quite different this year (and won't be published until December) and maybe the IRS will overlook this quirk in the first quarter requirements, but it's too late for you to adjust now anyway and it balances out with the 2nd installment.
So, if you have paid in more than last year's tax already reduce your September installment so that with withholding you paid a total of no more than 3/4 of last year's tax. good luck ed
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