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You can do it, but only by having the additional amount withheld. For estimated tax penalty purposes, withholding is applied equally throughout the year, but estimated tax payments are credited as of the date paid.

I understand now, thanks to this and other responses below. The IRS considers the tax due when the income is received, so an estimated tax payment is only appropriate if I recieved extra income without the proper withholding in that quarter. I'll just have to increase my withholding for my last few checks. Thanks!

The penalty applies only to the period of underpayment, spread equally through the year. For 2003, the last year for which I have the number handy, the annualized rate was approximately 2.9%. So, no, it would be much less than 6% of the total, although I can't give you the exact amount.

Ok, gotcha. Now it makes a little more sense.

Did you make a 2005 IRA contribution or not? If you did, we'll go into the details of your options here. If you're just curious, read about recharacterizations and nondeductible traditional IRA contributions in the FAQ over there --------------------->.

No, the question was just out of curiosity. I had been thinking about making a traditional IRA contribution, but it sounds like a Roth is the right way to go this year. Thanks for the link.

Moving on to your next post, the 2006 figures have been released, but I don't know if the 2006 W-4 is out yet or not. You can find the figures in Rev. Proc 2005-70, which you can get from the IRS site. For W-4 purposes, use the 2005 version and make the following changes...

Thanks, sir! I don't plan to be in this situation next year.

Thank you to all the participants on this thread- you all cleared the cobwebs from my thinking.
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