gmt[at]pobox.com (Marty Tipipn) > Can

- quote -

Thanks for all the responses (even with my less than useful
subject line)

I've adjusted my W-4 for the rest of the year, and it looks
like I can manage to have enough withheld to cover my tax
burden from 2003, so I think I'm out of the woods now.

Appreciate the advice to avoid making estimated tax payments
if possible -- the home business is going to have a *lot*
more taxable income this year than last, but I still think I
can have the company withhold enough tax next year to cover
my 2004 tax. Plus that relieves me from having to worry
about all the "high order" math on the estimated tax
worksheet... ;-)

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- quote -

Don't make estimate payments if you can have at least the
amount of last year's tax withheld (110% if last year's AGI
was over $150,000). Doesn't matter when it's withheld, but
estimates are considered only in the quarter they are make.
So withhold another $2,000 this year, and increase your
withholding next year INSTEAD of making estimates. By the
way, the "no more than $1,000 still owing" safe harbor does
not apply if you made any estimate payments.

ed

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Seth Breidbart <sethb[at]panix.com> wrote:
- quote -

Though you're under no obligation to tell them the income
was early in the year.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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"Marty Tipipn" <ggmt[at]pobox.com> wrote:

- quote -

If your employer will let you, make the payment through an
additional withholdings in November and December.

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Marty Tipipn <ggmt[at]pobox.com> wrote:

[underwithheld by $3k year to date]

- quote -

If you change your W-4, you're safe; the money is deemed
paid ratably over the year.

If you pay estimated, and the income was early in the year,
you might still owe a penalty (but less than if you don't
pay estimated).

Seth

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- quote -

The best solution would likely be that you have your
employer withhold a sufficent amount between now and the end
of the year to cover you. Remember there are safe havens
as long as you've paid in 100% of your prior year's tax
(110% if your income for the prior year was $150,000 or
more), that you've paid in at least 90% of what will be your
current year liability, or that you owe under $1,000 on the
bottom line of your tax return for the current year.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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Marty Tipipn wrote:

- quote -

You've got the answer above when you proposed having
employer take out additional amounts. If these amounts can
total more than $2k, then you'll avoid the underpayment
penalty.

See? Some things CAN work out.

ChEAr$,
Harlan Lunsford, EA n LA

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I run a small business out of the home in addition to my
regular job, and made just a little profit last year (2003).
Between that profit and bonus income at work, I ended up
paying another $1k on my 2003 tax return.

I probably should have been making estimated tax payments
this year, but didn't - the paperwork seemed like too much
hassle and I figured I'd be covered if I adjusted my W-4 to
take out a little extra to ensure I had as much witheld this
year as I owed last year.

But then life got in the way and I forgot to change my W-4
-- and I've just realized that I'm going to be short on my
witholding by about $3k. (That is, I'll end up with about
$3k less withheld in 2004 than what I owed in 2003.)

Can I make an estimated tax payment *now* to get squared up?
Should I change my W-4 to take out a bunch of money for the
remaining pay periods this year and try to make up the
difference? Or do I just sit tight and suffer a penalty?

If I understand it, I'd only owe about $100 in penalty,
which honestly might be easier than trying to unravel this
mess this year. Obviously I'll be making estimated tax
payments next year, as the home business has really taken
off and I'm going to have a lot more taxable income.

Any advice appreciated!

(BTW - I've got a copy of Pub 505 but it doesn't address this
particular situation.)

-Marty

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