Ed, Phil,

Thank you very much for the sound advice. I will sleep much better now.

Regards,
David

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dalfel wrote:

- quote -

IF your tax and withholding exactly matches last years ( and
you indicate your income is pretty stable, so good
assumption maybe) the balance due is 2,598. Assuming with
withholding increase of just that amount ratably over the
year, the average balance is 1,299. A 46$ penalty on that
average balance works out to 3.5%. Hmmm, not bad, do you
think? Unless you can borrow money as 1.9%!

However, all things are never equal, and with the decrease
in tax rates this year, the difference should be even less,
thus the penalty smaller.

Cheer$,
Harlan Lunsford, EA in LA

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dalfel wrote:

- quote -

Because of the "retroactive" reduction of the 27% tax
bracket to 25% in 2003, and that the corresponding
adjustment of the withholding tables only occured in
June/July, you should be OK for 2003.

Otherwise, if you're in the 25% WITHHOLDING bracket, your
withholding should have increased by about $1500/year
(multiplied by the fraction of 2002 during which you
had the increased withholding). If you're in the 15%
withholding bracket, your withholding should only have
increased $900/year.

In any case, if your deductions (if any) are predictible,
you can run through the calculations in form 1040-ES, using
the updated tax tables, and calculating how much withholding
you're going to have for the year, and see whether your
withholding is adequate to avoid penalties..

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"dalfel" <nospam[at]mindspring.com> wrote:

- quote -

If you've adjusted your withholding so you think the tax
paid will be at least 90% of the tax you owe, or 100% of
your total tax for last year, you don't need to pay
estimated taxes to avoid a penalty.

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

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"dalfel" <nospam[at]mindspring.com> wrote:

- quote -

You received the estimated tax form and vouchers because you
wete underwithheld last year, resulting in a penalty. By
increasing your withholding it sounds like you have taken
the correct steps to solve the problem for 2003. If your
2003 withholding is equal to or greater than $12,811 you
will owe no penalty (no matter how much you might have to
pay in April 2004. That is one of several "safe harbor"
actions to avoid a penalty. You can ignore the 1040ES and
voucher coupons, if you like. The IRS is just trying to be
helpful.

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"dalfel" <nospam[at]mindspring.com> writes:

- quote -

Project your withholding through the end of 2003. If that
total is more than your 2002 TAX, toss the ES vouchers.

Phil Marti
Topeka, KS

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Here is my situation, I hope to get some sound feedback from
you smart folks.

Last year (2002) my wife and I were both full-time employees
and paid taxes through W-2. When I did our taxes (1040) our
total tax was 12,811 and I had paid 10,213. That deficit
lead to a $46 penalty.

My first action was to drop my deductions (I am the primary
wage earner) to 0 from 2 and for 2003 expect a refund since
our income is fairly stable (5% raises). Note: All of our
income is thru our employers and we pay taxes thru them,
except for a small amount of bank interest.

Today I received a small packet 1040-ES (OCR) with two
estimated tax coupons (Sept, Jan). What should I do with
this? Should I pay or just file at the end of the year
1040?

Please help,
Thanks,
Dave

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