Geoff <Geoff[at]yahoo.com> wrote:
- quote -

It's safest to have him increase his withholding to $234 in
total for this year. Then he won't have any penalty. (I
don't know if the 110% applies based on last year's income
or this year's; if last year's, total withholding of $212
suffices.)

Or, pay the estimated tax for the quarter in which the
income is actually received. There won't be any penalty for
not paying estimated tax in the first quarter when there
wasn't any income then.

Seth

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Since estimated tax penalty is based upon the PREVIOUS years
tax amount, 2007 penalty wont be that significant, but watch
out for 2008. The penalty could be over $2000 then assuming
you were late up to 16 months and didnt pay the
self-employment taxes on time either.

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"ed" <edcosoft[at]sbcglobal.net> wrote:
- quote -

His salary is pretty trivial, as are the withholdings.
Essentially all of his income, both this year and last are
from investments. Unless he is reading this, he doesn't know
he has either the income or the investments!

So, if I make a first quarter payment now he is covered,
except for a trivial penalty? That is good news.

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Geoff[at]yahoo.com (Geoff) posted:

- quote -

I've personally had experience with "overlooked" periodic
payments of Estd Tax in the past, and immediately upon
realizing it, have sent in the coupon + payment. This never
resulted in any reaction.

My belief is that their "sniffers" are set for serious
problems, and allow -- or at least accept -- minor mistakes.

You should be alerted that the "Safe Harbor" provisions
don't apply in the same manner for those who make estimated
tax payments. If withholding were the payment procedure for
your son, then $250 would exceed his last year's total tax
obligation ... but with Estd Tax, there is an obligation to
meet periodic due dates related to accrued obligations (See
Form 2110). The same is possibly/probably true for NYS (but
check it out).

I would advise making payments that are substantially
related to amounts expected to be due. As I recall, there's
a worksheet with Form 2110, for predicting the penalty
amounts at various payment levels, related to total income
flow (at least there is in the TaxWise software). Any
penalty will be assessed, based on the income for the tax
year in question -- not some previous year.

You must be proud of your son.

Bill

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"Geoff" <G...[at]yahoo.com> wrote:

- quote -

To avoid any penalty for underpayment he need only pay $53
each quarter. He's now late almost two months on the first
quarter so his penalty will be .08 * 53 / 6 = 71 cents. If
he is now on salary and has withholding, that will cover the
$212 requirement.

ed

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"Geoff" <G...[at]yahoo.com> wrote:

- quote -

Was the $212 his total tax liability for the year? or only
the amount he had withheld? What did your son do to have an
INCOME of $200,000 this year? Obviously, he probably will
not be your dependent.

- quote -

Why is this YOUR problem, and not his?
If his tax liability was only $212 last year, then
withholding of that amount (or more) would be all that is
necessary to avoid underwithholding penalty.

- quote -

Again with the YOU.
If you have no withholding or estimated tax payments, the
penalty would be on the amount that you are short of 100% of
last year's tax liability. Maybe $20 to $25.

- quote -

Absolutely no idea

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Last year my son had $6,467 of income and paid $212 in tax.
This year he will, unexpectedly, have income of $200,000.
He did not make 1Q estimated tax payment.

Can I avoid penalties next year by making a $250 estimated
tax payment for 2Q? If not, what should I do?

If I did nothing, would the penalty be on the tax on
$200,000, or on the tax on $6,467, or something else.

Thanks.

Same questions for NYS...

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