Barry Margolin <barmar[at]alum.mit.edu> wrote:
- quote -

However, I hope to get a decent amount of income from a
partnership in which I materially participate. So I believe
I have to pay estimated taxes since there is no withholding
for this K-1 income.

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an_ordinary_guy_158[at]hotmail.com (Bill) wrote:
- quote -

Bill: The $1,000 shortfall safe harbor doesn't apply if you
make estimated payments, just withholding. Also just
paying in the amount of last year's tax doesn't work unless
the payments are roughly equal.

In Dave's case he must apply Withholding to the first 2
quarters, and if he needs more in the 2 installments than he
had in Withholding, he will have a penalty unless
Annualizing corrects this. The 1040ES won't do him too much
good, and it hasn't been revised for the Post-May 5 rates
and rules. Ed

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an_ordinary_guy_158[at]hotmail.com (Bill) wrote:

- quote -

Although since he's been laid off halfway through this year,
his tax due for 2003 will probably be much less than it was
for 2002. So applying this safe harbor will likely result
in being extremely overwithheld, which is not usually a good
financial plan. And since he'll be paying all this
estimated tax while not earning any wages, it will probably
have a significant impact to his personal cash flow.

In this situation, I'd suggest aiming for the $1,000 less
than the total 2003 tax criterion.

--
Barry Margolin, barmar[at]alum.mit.edu
Level(3) Communicaions, Woburn, MA

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Dave posted:

- quote -

Given the info provided, the only honest answer is to direct
you to Form 1040-ES, which will provide the format for
developing a projection of your total 2003 income and then
estimating the taxes which will be due.

Some "Safe Harbor" thoughts: If you pay estimated taxes to
bring your total withholding and E/T payments to equal the
total tax due for 2002, you will avoid penalties. And, if
your total *advance* payments are equal to a sum which is
not more than $1,000 less than your total tax bill, you
should avoid penalties.

But the best advice is to obtain a 1040-ES, read the form
and do the math.

Bill

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