Herb Smith wrote:
- quote -

After you have made the estimated payments required by law I
generally recommended that a taxpayer purchase T-bills, due
on 4/1 in the ammonite of the balance expected to be due
with the return. But you will not get this kind of advice if
you do your return yourself and just read the instructions.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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seville2[at]excite.com (Carolyn) wrote:

- quote -

True, if you have withholding equal to (or greater than)
110% of the previous year's tax liability, you are covered
by a "safe harbor". In that case, the gain from an
unexpected sale can be deferred to when you file your
return, and no estimated payments are required. They CAN be
made, if you wish to avoid a large end-of-year tax bill, but
they are not REQUIRED.

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seville2[at]excite.com (Carolyn) wrote:

- quote -

That's right, if it's after April 1 there's no way to
retroactively increase your first installment, however, if
you pay the extra amount late the penalty isn't that bad, 5%
simple interest only on the underpayment amount. If you let
the IRS figure your penalty on the Regular Method, you don't
have to complete form 2210. If the gain is in later
quarters you can avoid the penalty by paying enough in later
quarters to satisfy the form 2210 Schedule AI and have no
penalty, but YOU have to complete 2210AI then, and compute
the penalty.

If you know your quarterly income/deductions etc any tax
program will complete the 2210 AI for you with your return.
There are calculators available for downloading off the web
that will compute your 2210 AI minimum installments for you
since it is almost impossible to do it yourself from Pub 505
istructions or 1040ES, particularly if you are subject to
AMT. If you have a simple tax situation (with no AMT) it's
not difficult to annualize each quarter yourself but DO NOT
try to use the 90% of current full year's estimated taxes in
your computations because you would 1. unnecessarily load
in year-end distributions and bonuses, 2. you might
underestimate and thereby incur a penalty, 3. you might
overestimate which is redundant as the formulas would select
the annualized amount or 1/4 of last year's tax safe harbor
as being lower.

- quote -

That's right, too. And, if your last year's AGI was less
than $150,000 you only have to pay 100% of last year's tax.
The same rule applies for estimate payments except to be
completely free from penalty they would have to be equal (or
heavier in early quarters) whereas Withholding is averaged
over all 4 quarters (unless directed otherwise by you).

good luck. ed

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Carolyn wrote:

- quote -

I'm not sure of the exact percentage, except that it's
still 100% for low-to-middle-income taxpayers, but
you're reading it correctly.

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I was browsing through earlier replies and it appears the
consensus is -- if you have a one time capital gain during
the year, you have to either pay it off in quarterly
installments rather than a one time lump (except that I
didn't have the gain until after April 15th) or pay a one
time lump and be forced into the headache of filing a 2010
(?) Yes?

My question is, it appears by the terms of the withholding
certificate that you don't have to pay estimated taxes if
you pay at least 110% of your prior year's tax through
withholding. Can I possibly be reading this correctly?

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