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I am filling a 1040 because I sold stock last year. I did not have any federal taxes witheld when I sold the stock. My wife and I are filing jointly and owe $4054. We have $2884 in witholding. So we still owe $1170. I am worried about tax penalties now because the 1040 form says you may be penalized if: You owe more than $1000 and what you owe is more than 10% of your total taxes. Now if we file seperatly, my wife owes $191 and I owe $982. This makes our grand total owed $1173 but neither of us goes over the $1,000 mark. I dont even know if this penalty will apply to us. It is part of the household employee part at the end of the instructions. We did not have household employees but we do meet the other criteria (owing more than 1000 and what we owe is more than 10% of total taxes)
So after all is said and done, should we file jointly (owing 1170), file seperatly (wife 191, me 982), or do these penalties even apply to us.
Thank you very much for your help,
Adam
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You have a "safe harbor" IF, the amount you withheld (2884) this year is equal to the amount of withholding you had last year. Check last year's return for that number.

These penalties may not apply, I do not have quite enough information.

When you do file, pay the tax if you can, but do not send in Form 2210. Let the IRS do that for you. There is some flexibility as to whether they will assess this penalty. Soooo, let them assess it. Generally there is no way to get that penalty abated if you self assess, unless you can show that you computed the original penalty incorrectly.

Good luck.
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[[ am filling a 1040 because I sold stock last year. I did not have any federal
taxes witheld when I sold the stock. My wife and I are filing jointly and owe
$4054. We have $2884 in witholding. So we still owe $1170. I am worried
about tax penalties now because the 1040 form says you may be penalized if:
You owe more than $1000 and what you owe is more than 10% of your total
taxes.]]

but you may NOT be subject to penalties if your total 1998 withholding is greater than your 1997 total income tax liability. You can read more about this exception to the penalty in my post on estimated taxes in the Taxes fAQ area.

[[ Now if we file seperatly, my wife owes $191 and I owe $982.]]

this ASSUMES that you are filing the married/separate returns appropriately. If you are...great. If not, you could have MUCH more trouble than you have now.

[[ This
makes our grand total owed $1173 but neither of us goes over the $1,000
mark. I dont even know if this penalty will apply to us.]]

Well, wouldn't you want to find out before you jump through all of these hoops? Again, I discuss how to beat the penalty in the Taxes FAQ area. You might want to check it out.

TMF Taxes
Roy

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[[You have a "safe harbor" IF, the amount you withheld (2884) this year is equal
to the amount of withholding you had last year. Check last year's return for that
number.]]

I'm sure that you mean if your 1998 withholding meets or exceeds your 1997 total tax liability (and NOT your 1997 withholding) in order to meet the safe harbor.

TMF Taxes
Roy
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