Question about the 90%/100% withholding rule

#2 01-14-2005, 10:56 PM

DFStoneJr[at]yahoo.com writes:

- quote -

> I'm aware that, in a general sense, I need to have withheld
> (or made quarterly payments by Jan. 15, or some combination
> of the two by Jan. 15) an amount equal to 90% of this year's
> taxes or 100% of last year's taxes.
> My question is, if I'm basing my payments on the
> 100%-of-last-year amount, is that 100% of my FIT liability,
> or 100% of the "total tax" liability, which includes my
> self-employment tax?

Total tax.

Phil Marti
Clarksburg, MD

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#1 01-04-2005, 07:40 AM

<DFStoneJr[at]yahoo.com> wrote

- quote -

> I'm aware that, in a general sense, I need to have withheld
> (or made quarterly payments by Jan. 15, or some combination
> of the two by Jan. 15) an amount equal to 90% of this year's
> taxes or 100% of last year's taxes.
> My question is, if I'm basing my payments on the
> 100%-of-last-year amount, is that 100% of my FIT liability,
> or 100% of the "total tax" liability, which includes my
> self-employment tax?

Total tax (including SE tax and AMT, and....)

- quote -

> If my 100% includes self-employment tax, I'm looking at
> sending in a check for about $7,000 by Jan. 15., because
> last year, a substantial portion of my total tax liability
> was attributable to self-employment tax. This year, I've
> been salaried for three-quarters of the year, and my
> liability for self-employment tax will be much smaller.

So, just peg 100% or more of this years taxes and be done with it.

- quote -

> I wouldn't mind using the 90%-of-this-year's-liability test,
> except I have no flippin' idea what my tax liability will
> be: I have three months of self-employment income and
> therefore some self-employment tax, an undetermined amount
> that I can put in an SEP IRA, nine months of salaried
> income, a realignment of my investment portfolio coupled
> with the implementation of a new strategy that emphasizes
> short-term gains, some charitable contributions, some
> potential miscellaneous deductions (depending on what my AGI
> turns out to be) ... and probably some stuff I can't
> remember. I could guess at my AGI, but I could easily be
> $30K off, so the 100% test seems easier.

About two weeks ago you should have done some serious tax
planning so you had a better handle on your numbers.

--
Paul A. Thomas, CPA
Athens, Georgia

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01-04-2005, 06:43 AM

DFStoneJr[at]yahoo.com writes:

- quote -

> My question is, if I'm basing my payments on the
> 100%-of-last-year amount, is that 100% of my FIT liability,
> or 100% of the "total tax" liability, which includes my
> self-employment tax?

Including SET.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

#-1 01-02-2005, 08:43 PM

I'm aware that, in a general sense, I need to have withheld
(or made quarterly payments by Jan. 15, or some combination
of the two by Jan. 15) an amount equal to 90% of this year's
taxes or 100% of last year's taxes.

My question is, if I'm basing my payments on the
100%-of-last-year amount, is that 100% of my FIT liability,
or 100% of the "total tax" liability, which includes my
self-employment tax?

If my 100% includes self-employment tax, I'm looking at
sending in a check for about $7,000 by Jan. 15., because
last year, a substantial portion of my total tax liability
was attributable to self-employment tax. This year, I've
been salaried for three-quarters of the year, and my
liability for self-employment tax will be much smaller.

I wouldn't mind using the 90%-of-this-year's-liability test,
except I have no flippin' idea what my tax liability will
be: I have three months of self-employment income and
therefore some self-employment tax, an undetermined amount
that I can put in an SEP IRA, nine months of salaried
income, a realignment of my investment portfolio coupled
with the implementation of a new strategy that emphasizes
short-term gains, some charitable contributions, some
potential miscellaneous deductions (depending on what my AGI
turns out to be) ... and probably some stuff I can't
remember. I could guess at my AGI, but I could easily be
$30K off, so the 100% test seems easier.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

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