- quote -

As long as you file jointly that would be okay.

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gold[at]nyx.net (Barry Gold) wrote:

- quote -

I don't have a job but my wife does. Since we file jointly,
would it be just as effective to have my wife deduct extra
tax from her remaining two paychecks this year?

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"DaveR" <NOSPAM_drubin[at]NOSPAM_i-2000.com> wrote:

- quote -

Since the underestimate penalty is based on fed rates, which
are low (5+/-%), I have clients who never pay estimates
because they feel they can make more on the money than the
penalty charge.

Another thing to consider is that there is a "safe harbor"
rule that if you have taxes withheld from any salary you may
be drawing that is equal to what you paid in total tax last
year (110% of last years tax if your AGI was $150k or more),
no underestimate penalty will be owed. Also, if what you
have paid in or withheld is at least 90% of your actual tax
or is less than $1000, you won't be assessed an
underestimate penalty.

Having said all that, if you don't like to have to scramble
at tax time to come up with the tax owed, you should
probably go ahead and pay what you can ASAP and make up the
difference with the 4th qtr estimate due 1/15/04.

Mike Lewis, CPA

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DaveR <NOSPAM_drubin[at]NOSPAM_i-2000.com> wrote:

- quote -

This is for discussion purposes only, and is not tax advice.
I'm not a tax professional. If you want tax advice, hire a
professional.

I would say make the 9/15 payment now, ASAP. It can't make
things worse, and might help a little. Actually, that
should be the total of what the 3/15, 6/15, and 9/15
payments should have been.

You *might* be penalized for your missed payments. Or you
might not. It depends on how much money is involved. And
when you received the income.

*If* there is a penalty, it will be calculated as X%(*) per
year on a daily basis. Frex, if X is 10%, you will be
charged .0278% of the amount you should have paid for each
day from the due date to the time you make the payment.
(.0278 is 10 divided by 365.)

For small amounts (e.g., if all you have is unemployment and
$2000 in consulting income) the IRS probably won't bug you.
If you owe substantial tax, they will probably send you a
bill. How big the threshold is... well, it's become easier
for the IRS to send this kind of bill because they have
computers to do all the work.

Btw, there is, or used to be, a safe harbor. If you also
had wages, and you arranged for your payroll deductions to
at least equal the amount of taxes you owed, you wouldn't be
charged a penalty. Even if all the payments happened in the
last month of the year, they wouldn't count it as a "late"
payment. (Unlike _estimated_ tax payments, where as I said
they calculate penalties by the day.) So if you also have
(or can get) a job, arrange for a huge "additional
withholding" amount on your W-4 and you'll be OK -- *IF* the
IRS hasn't closed this loophole.

Good luck.

(*) I don't know how much the penalty/interest is this year.
A tax pro would.

--
I pledge allegiance to the Constitution of the United States
of America, and to the republic which it established, one
nation from many peoples, promising liberty and justice for
all.

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DaveR <NOSPAM_drubin[at]NOSPAM_i-2000.com> wrote:

- quote -

You don't give enough information for an answer so get IRS
form 2210 and complete it as though the year is over. IF
your income was much greater in the last 1/2 of the year, it
would be advantageous to complete the Schedule AI also. The
first page of 2210 will tell you whether you are underpaid
for any quarter. THen it is just math to figure your
penalty. %5 simple interest (4% after 9/1/03) on any
unpaid underpayment until you pay it. That interest is the
only penalty. There are several tax estimators on the web
and even calculators for the installments on the AI basis.
Try 2210 tax calculator, or just tax calculator in any
search engine. ed

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DaveR <NOSPAM_drubin[at]NOSPAM_i-2000.com> writes:

- quote -

The estimated tax penalty is computed as interest from the
due date of the payment to the date you pay it. Thus, the
sooner you catch up, the less penalty will be due.

Phil Marti
Topeka, KS

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I just realized I should be making estimated tax payments,
because I received some unemployment this year and also have
some consulting income from a partnership, neither of which
has taxes withheld.

Should I just send in the Sept. 15 voucher now (even though
it is late), then make another payment on Jan. 15? Will I be
penalized for missing the Sept. 15 deadline, or for not
making payments earlier in the year?

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