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Financial Planning / Tax Strategies


Subject:  Re: Estimated tax question Date:  3/23/2014  4:58 PM
Author:  Wradical Number:  120558 of 130020

We have paid no income tax the past few years. It looks like we may owe less than $100 to the feds for 2013. But we have just used up all the capital losses we have been carrying forward for a while, so we will likely owe somewhat more for 2014. I don't know how much -- estimating is impossible since it entirely depends on how much capital gain our investment manager racks up for us.

Given the small amount of tax owed for 2013, do we meet the safe harbor requirement to not have to pay estimated for 2014?

A couple of thoughts:
1. If your 2014 tax ultimately proves to be under $1,000 no estimated taxes are required.
2. You could pay an estimated tax payment equal to your 2013 tax, ($100 or less is fine) and then you'll be covered no matter what.
3. How often do you get periodic reports or statements from your investment advisor? He/she should be giving you something to do on. You can cover 90% of your 2014 tax with estimates, and also be safe.
4. If you do incur a penalty, it's based on the lesser of the 2013 tax or 2014 tax, so it would likely be the 2013 (less than $100) amount. And the rate is the equivalent of interest at 3%. So it's really nothing to sweat about.

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