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Thanks a lot Ed,

1. The penalty is based on the DIFFERENCE between how much was withheld and the lesser of last year's tax or 90% of this year's tax. Once the $1,000 THRESHHOLD is passed forget it, your penalty is figured on the full difference.

2. If you paid 4 equal and on time installments, or just paid withholding alone, multiply the difference in #1 times .05258 minus .00022 times the number of days prior to April 15, 2007 that you paid the difference.


Let me make sure I get this right-
If the difference between my withholding and last years taxes is about $240, than the penalty is $12.60, and than 5 cents less for each day I would pay it before 4/15/07.
So if I pay my taxes owed by 4/15/07 the full penalty would be $12.60, which the IRS will send me a bill for later. If I choose to pay my taxes before the deadline I can save 5 cents per day. Is that correct?
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