- quote -

Ah, yes, I think that's the answer. It didn't occur to me
before. By making the taxpayer mail in a paper return, the
IRS forces them to attach a paper W-2 or 1099-R form showing
the withholding. If they e-file, all they have to do is key
in the made-up numbers.

Of course they could prepare a fake W-2 or 1099-R, but that
does add a level of difficulty. They can't pick up blank W-2
or 1099-R forms at the post office or the public library.
And one of those forms filled in by hand would be an obvious
tip-off. They have to find a way to type or print the
information on the form.

So, yes, they are less likely to submit a fraudulent return
if they have to mail a paper return.

Bob Sandler

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

You only need one way, the AI, because it uses the Last
Year's Tax Safe Harbor if less than your annualized amount,
and if your income is higher than last year and comes late
in the year you KNOW the AI is better. Trying to estimate
full year's income to use the 90% of Current Year's Tax Safe
Harbor in advance is NOT *safe* and shouldn't be used until
the year is over. Again, if your income bunches up in
December you KNOW the AI Method will compute lower
installments in April, June and September than the 90%
(un)Safe Harbor.

ed >
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

HAH! You're asking ME how THEY think? (grin

ChEAr$,
Harlan Lunsford, EA n LA

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

Do they think that these people are less likely to try to
submit a fraudulent return if they have to mail paper?

If this is a common fraud indicator, why don't they just put
it in their super-secret audit criteria?

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

The 50% was an arbitrary percentage designed to indicate the
possibility that any such W2 just might be fraudulent. IOW
they saw in the early days of efiling that most all the
cases of EIC fraud included this one indicator.

I am amused at it betimes, esp since my own withholding from
my pay check from my own corporation can't exceed that in
order that I might be be able to efile my own return. Of
course I could withhold, say... 70%, and then end of year
just go ahead and file on paper, unlike 99% of my clients
whose returns are filed electronically. (grin)

ChEAr$,
Harlan Lunsford, EA, ERO and ET in LA

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

cambridge <cambridgew...[at]hotmail.com> wrote:

- quote -

The important form is the [not required] penalty form 2210.
That tells you if you havent paid enough taxes on time. The
IRS and most tax softwares automatically calculate i2210 for
you and tell you if you have a penalty.

2210 has two ways of calculating the penalty, of which the
IRS uses equal installments. The second method of
annualized income is better for me personally because most
of my variable income is in the final quarter. You have to
do it both ways to find out whats best for you.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

Pure speculation:

The cases where witholding % is 50% or more, are probably
rare, and the IRS figures this is more likley to be an ERO
typo or fraud, than a correct entry.

--
ArtKamlet at a o l dot c o m Columbus OH K2PZH

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

They even question legitimate W2s where the withholding is
twice as much as the gross income!

See http://www.w2in.com/funnyw2.jpg

--
Don EA in Upstate NY

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

There is a similar restriction for W-2s. Would anyone care
to speculate as to why the IRS imposes these restrictions
for e-filing?

Bob Sandler

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

least amount of taxes in advance would delay paying the
remainder until April 15 and therefor probably not be
concerned that he was unable to e-file to hasten a refund

ed

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Mark Freeland" <BnetOne...[at]sbcglobal.net> wrote:
- quote -

whatever amount you have withheld is not available to you
for rollover--you have to come up with those funds out of
your own pocket. Hardly worth the trouble to avoid an
underpayment penatly.

the annualized method is a pain, but it does work.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Mark Freeland <BnetOnewsX[at]sbcglobal.net> wrote:
- quote -

OK - if they will w/h 99% hen go for it.

T`he IRS e-file standards (Pub 1345a) will not allow you to e-file
when 50% or more of your gross Form 1099 distribution is withheld
as taxes. Not a big deal, just a nasty surprise if you were
hoping to e-file.

--
ArtKamlet at a o l dot c o m Columbus OH K2PZH

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

Art. T.Rowe Price will withhold up to 100% of any
withdrawal, (including RMDs) and usually will do it verbally
in one phone call. I can't imagine why any company would put
a limit on it.

ed

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Arthur Kamlet" <kamlet[at]panix.com> wrote:

- quote -

Thanks for the reply (which I read as affirmative, assuming
that the custodian will honor the withholding request).

FWIW, my father used to have 100% of a petty pension
distribution withheld. More on point, Fidelity's IRA
withdrawal form instructs you to specify for fed withholding
a whole number percentage between 10 and 99. So it seems
they won't withhold the whole withdrawal, but they're
willing to come darn close.

http://personal.fidelity.com/accounts/pdf/mrd2.pdf (Fidelity IRA Withdrawal
Request Instr. and Form)

Mark Freeland
BnetOnewsX[at]sbcglobal.net

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Mark Freeland <BnetOnewsX[at]sbcglobal.net> wrote:

- quote -

I seriously doubt the IRA custodian will withhold more than
25% as taxes, but 25% is better than none.

--
ArtKamlet at a o l dot c o m Columbus OH K2PZH

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Brew1" <brew.one[at]gmail.com> wrote:

- quote -

Always one for trying creative solutions (but still well
within the borders of the law), would the following work?

Make an IRA withdrawal (distribution) to make up estimate
shortfall (plus some cushion); Have the IRA
custodian/trustee withhold the entire distribution for
taxes; Within 60 days, pay into the IRA the same amount as
distributed/withheld.

Since withholdings (as opposed to estimates) don't have to
be evenly spread out during the year, this provides a last
minute "fix up" for total estimates/withholding. Since the
equivalent amount is redeposited in the IRA within 60 days,
the rollover is a non-taxable event, and no penalty. The IRS
allows you to do a rollover into the same IRA, so that's not
an issue. Of course there is the warning that you can't do
this more than once a year, per IRA.

- quote -

Been there, done that. Not worth the effort in the detailed
bookkeeping if there's a better way.

Mark Freeland
BnetOnewsX[at]sbcglobal.net

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Keep in mind: unless you make 4 EQUAL payments (and it's too
late in the year to accomplish that), you can be charged
with underpayment even if you paid in 90% of current
liability. Better to try and pay in 100% of your estimated
liability and, when you prepare your taxes, use the
annualized method if income was greater in the second half
of the year.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

Thanks for all replies. That is what I needed to know.
Skip the worksheet and only send the voucher. Don't
understand why this is not explicit in the tax instructions.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

Why not skip the whole worksheet? The worksheet is just for
your own use, to help you calculate your tax liability. You
don't send the worksheet to the IRS. You don't have to use
it if you don't like the way it works. If you understand the
concepts, do your own calculation of how much to pay and
fill in the result on the voucher. The voucher is the only
thing you send to the IRS, and it simply says, in effect,
"here's how much I'm paying this quarter." You don't have to
show how you arrived at the amount.

Bob Sandler

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

cambridge <cambridgew...[at]hotmail.com> wrote:

- quote -

The basic requirement is that you have paid in as much as
was your last year's tax (100% of that tax) in order to
avoid penalty of underpayment. This is true unless your
adjusted gross income for the prior year exceeded $150,000
($75,000 if your filing status for 2007 is married filing
separately). In that case you would substitute 110% for
100% quoted above.

The simplest way is to divide last year's bottom line tax,
divide it by 4, and make 4 equal payments to cover your
liability. If you are going to make less than the prior
year, you can make adjustments to the payments you make. As
long as you have paid in 90% of what will be your current
year's tax, no penalty will be applied.

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >