In article <48f76ee3$0$33529$742ec2ed[at]news.sonic.net> ,
Scott S. <ss.mtm[at]seligman.net> wrote:
- quote -

Best was to have atached it to the original return.

At this point a 1040X is not needed or wanted. Attach a
completed 2210 AI to a copy of the notice and return promptly
to the address in the notice.
--


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. > << ------------------------------------------------------- >

ed writes:
- quote -

Suppose the 2210 AI says you don't owe a penalty, but you don't attach
it to your return. Then the IRS computes the penalty using the Regular
Method and asks you to pay.

Are you stuck paying this inflated penalty calculation? Can you
respond to the payment request by sending in a correct 2210 AI (with
no payment)? Or can you perhaps file a 1040X with the 2210 AI attached
to avoid paying the penalty?

Scott S.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Oct 10, 8:52 pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:

- quote -

Just do your best guess - thats partly why they are called
"estimated".
Just apply the qualified percentage from 2007 to your 2008 estimate.
Round up a bit if you are really worried.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In misc.taxes.moderated, removeps-groups[at]yahoo.com wrote:

- quote -

Plus, with some securities such as REITs or some foreign stocks,
there is often a later revised 1099 with changes to the dividend
numbers. If you have those kind of things, its best to wait until
maybe March to file. Check your broker's website for the latest
1099; the mailed version is usually later. It seems to me that
usually the changes are to your benefit for small amounts, so if you
file earlier, you may not find it worthwhile to file the amended
return to save a few dollars.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Oct 10, 9:52*pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -

Well, Art, I misspoke slightly, presuming everyone knew about the
Schedule D Worksheets.. You get the clue from line 22 of Schedule D
which directs you to complete the Qualified Dividends and Capital
Gains Tax Worksheet on page 38 ( of maybe its lpage 35 because it
changes every year) of the 1040 instructions. On line 2 of that
Worksheet it says to enter the amount ffrom line 9b of 1040 (which is
your Qualified Dividends). It's the same line 2 on the longer
Worksheet for Capital Gains tax calculations.

And, removeps, you are correct. The instructions for 2210 AI and
Publication 505 tells you to make your best estimate. I doubt your
guess based on my 4. points would create a penlty whereas their 1099
wouldn't, but I'd use whichever amount produced the lower final
penalty.

And rick++, generally you may be correct about #2 (the AI Method)
being better if you have higher income in the last part of theyear,
but it is more pertinent for Anualization what non-reoccuring
deductions you can put into the first quarter, such as carryover tax
losses and other capital losses, IRA and 401K investments, Property
tax and other "above the line" items, as well as many credits to a
lesser degree.. From this it follows that pushing IRA or pension
distributions and Capital Gains into the final quarter is
advantageous.

ed

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<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Oct 10, 1:24 pm, ed <edcos...[at]sbcglobal.net> wrote:

- quote -

Yeah, this is tedious. Your broker sends you an end of year statement
listing regular and qualified dividends, but there's nothing every
quarter. I can get a list of all dividends received within a given
quarter, but I guess it's up to me to determine if it is qualified,
based on the type of underlying company and holding period.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <80e5c0da-1956-45c3-861d-2bdbdfe919c0[at]l42g2000hsc.googlegroups.com> ,
ed <edcosoft[at]sbcglobal.net> wrote:
- quote -


OK I'll bite.



On hat line of schedule D would you enter Qualfied Dividends?


- quote -



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. > << ------------------------------------------------------- >

On Oct 10, 1:31*pm, "jack" <j...[at]yahoo.org> wrote:
- quote -

There's another Safe Harbor for those paying only Withholding (no cash
estimate installments) and that's within $1,000 of current year's tax.

Also, if you use the 2210 AI you must compute it and the penalty and
Pay it and attach it to your 1040, otherwise the IRS wil compute the
penalty on the Regular Method and throw out your 2210..

Also, the 5.07% is not an average interest rate it is a composit
FACTOR to multiply times your total underwithoholding ONLY if you
elect to use the Short Method of figuring the penalty, which is that
you paid no installments, or 4 equal and on-time installments, plus
withholding which you agree to average and you don't pay the
underwithholding until April 15, 2009. Following those rules it gets
the same results as if you mulitiplied each quarter's underwithholding
by the then current interest rate, from its due date to April 15,
2009.

I suggest anyone interested in usinig the 2210 AI Method get a good
"2210 tax calculator" off the web. Realize that it requires computing
your 1040, annualized for each tax quarter, complete with phase-outs,
limitations, AMT applied to each quarter and that quarter's annualized
AGI and taxable income. So don't look for a typical TT "how much was
your wages" quiz-me form. It's at least as difficult as for you as
using the "Forms method" of TT, but the calculator does al the
figuring for you and spits out each quarter's requirement.

About the poster's questoin about Qualified Dividends Arter they are
determined they go on Schedule D. To determine which are Qualified 1.
Look at last year for that stock, 2 Presume if it is a domestic or
foreign corporation that they are all Qualified , except 3. If they
are from a limited partnership, partnership, your Schedule C or E,
bonds, interest, muni's or bond funds, Hy-yeild funds,IRA or other
pension distibution, they are NOT Qualified, and 4. You might have to
guess (based on the above and it might be a portion are Qualified) for
Q1,2 and 3 of 2210AI but their year end reporting (1099) will tell
you..

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. > << ------------------------------------------------------- >

removeps-groups[at]yahoo.com wrote:
- quote -


- quote -

That takes care of the "generally" part of the portion of the
instructions I quoted. Possible problem and the reason I suggested to
OP to read the details is in the paragraph and there's insufficient data
in previous postings to know what actual situation might be.

- quote -

That's why I essentially iterated the IRS suggestion printed a little
earlier in the instructions for 2210 of

- quote -

--

--
<< ------------------------------------------------------- > << 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 -

One last clarification, and I will go away.

In this example, if I paid $4,000 in estimated taxes; the interest would be
on the shortfall from safe harbor; $5,400 less $4,000, or $1,400.
(calculated as per form 2210 of course...)

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Oct 9, 2:07 pm, dpb <n...[at]non.net> wrote:
- quote -

If the prior year tax due was $200,000, and the current year tax due
is $6,000, the safe harbor is $5,400, which is the smaller of 90% of
this years tax, or 110% of last year's tax.

Note that the rules are more lenient for farmer's and fisherman (need
only 66.66% of this years taxes), and those with a low AGI (need only
100% of last year's tax).



- quote -

The determination of whether you have a penalty, and the simple form
to calculate interest and pretty straightforward. It is only the long
form with Schedule AI that is a nightmare. I still have not figured
out how to calculate qualified dividends.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

jack wrote:
....
- quote -

From 2210 instructions

http://www.irs.gov/pub/irs-pdf/i2210.pdf

- quote -


2210 is pretty complex; only way you can be sure is to work through it.

There are a couple of exceptions and ways/reasons for waivers of any
penalties as well. One would be best to read the actual instructions
and apply realistic numbers to one's real situation rather than
hypothetical musings.

--

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

<removeps-groups[at]yahoo.com> wrote in message
news:da977114-89ab-4043-8948-ab33094c8725[at]r15g2000prh.googlegroups.com...
- quote -

If safe harbor is $1,000,000 and I only pay $5,000 I have to pay a penalty
on the $995,000 if my actual taxes turn out to be $6,000?

That can't be right.
I "think" I read that safe harbor can also be 100% of the actual taxes
(rather than 110% of the previous years taxes).

If that is true than my penalty would be interest on $1,000? If so, then
that is fair enough.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Oct 6, 9:16 pm, "jack" <j...[at]yahoo.org> wrote:

- quote -

The penalty is on the shortfall between the actual tax paid and safe
harbor value. So if you paid 200k in taxes last year, you need to pay
220k this year to be in safe habor. So in form 2210 (http://
www.irs.gov/pub/irs-pdf/f2210.pdf)
Line 9 = 220k
Line 13 = Total withholding and estimated tax paid, let's say 180k
Line 14 = Total underpayment = 220k-180k = 40k
Line 15 = Penalty = Above line * 0.05057
Line 16 = Reduction in penalty if penalty paid before April 15
Line 17 = Line 15 - Line 16

So you see that the penalty depends only of the shortfall between the
actual tax paid and the safe harbor value. So even your tax due is 1M
or 100M, the penalty is still the same.

Also, observe that the interest is not a flat 8% but 5.057%. I think
this is because each estimated payment is late by a different number
of days: say the 4/15/2008 payment is paid on 4/15/2009 so that's
interest for one whole year on 1/4 of the required annual payment; say
the 6/15/2008 payment is paid on 4/15/2009, so that's interest for
10/12 of a year on 1/4 of the required annual payments; etc. Also,
the rate for each quarter is I think tied to the 10 year bond rate or
fed interbank rate, so it is not 8% for every quarter.

But if you have not paid by 4/15/2009, then the approximately 8% a
year interest is levied on the entire tax due, which is on the entire
1M or 100M in my example above.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

"ed" <edcosoft[at]sbcglobal.net> wrote in message
news:c9779516-3b05-4ff5-bd14-397e7759ea82[at]8g2000hse.googlegroups.com...
- quote -


--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Oct 7, 9:07*am, "rick++" <rick...[at]hotmail.com> wrote:
- quote -

The question is "what amount is the penalty figured on". The answer
is "Simple interest at the current rate (6% right now) on the
difference between what you have actually paid and what you should
have paid in each installment until the date you paid it"

How you figure each installment and what is actually paid in each
installment is a long story solved by completing form 2210 and
possibly its Schedlue AI.

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. > << ------------------------------------------------------- >

Fill out form 2110 to estimate penalties.
Its in most tax software packages.
The 2008 version should be coming out any week now.

There two ways to compute it (1) equal quarters (short & easy)
and (2) annualized (long & hard). #2 is better if you have
more income 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. > << ------------------------------------------------------- >

"jack" <jack[at]yahoo.org> wrote in message
news:gcemsa$aaa$1[at]registered.motzarella.org...
- quote -

Reading it over, my figures are rather high, but again, I am just looking
for the concept. Sorry.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

jack[at]yahoo.org (jack) posted:

- quote -

Jack, it seems you've got the basis for estimated taxes mixed up with
Adjusted Gross Income.

Let's start with this: if you have withholding from your salary in
2008, you reach safe harbor if the total amount withheld is at least
100% of the total income _tax_ you paid in 2007.

If you do not have tax withheld (either because you receive no salary -
due to self employment, or income from investments), then you are
responsible for making estimated tax payments.
These should be based on your total anticipated income for 2008, and
should be paid in 4 periodic payments -- due April 15, June 15,
September 15 and January 15 of 2009.

But the payments, while based on your income, should not be equal to
your entire income. Rather, they should be calculated on the amount of
tax due from that income (starting at the 5% level, then 15%, and
escalating eventually to the 35% level -- not counting payments for
Social Security or Medicare, which are separately calculated on Form SE,
tied to Schedule C - or C-EZ).

I would suggest you visit www.irs.gov, where you can read online, the
sections of Pub 17 which deal with when Estimated Tax payments are
required -- and then, if you need to make such payments, check out Pub
505 for help in figuring methods of calculating your payments.
If you find payments are necessary, then download Form 1040-ES, which
includes instructions and a general guide to developing your estimated
income, and the tax which would then be required.

Bill

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

As I understand it, there are no penalties if you pay estimated taxes or
have withholding equal to 110% of your income.

If you fail to do that, you have to pay 8% interest. But is the 8% interest
on what you would have had to pay to make safe harbor or your 2008 tax bill?

Lets say your 2007 income was $200,000. You have to pay $220,000 in
estimated taxes for 2008 (assuming no withholding) to make safe harbor; 4
quarterly payments of $55,000.
Lets say you don't bother, and your 2008 tax comes to $1,000,000.
Do you pay the 8% interest on $55,000 from the 4 dates the payments were
due; or do you pay the 8% interest on $250,000 from those dates?

On the otherhand, if your 2008 income is $40,000, is it on $55,000 or
$10,000?

I realize it is actually more complicated than this, but I am just looking
for the concept; is the penalty based on 2007 or 2008 taxes.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >