JohnC <skywaffle1_at_yahoo_dot_com[at]foo.com> wrote:

- quote -

Bad employer. :-)

- quote -

You could try to fill out form 2210 in such a way that shows
the uneven receipt of income, and therefore reduces the penalty.
To do this, you will need your paycheck stubs dated March 31, May 31,
August 31.

It will also help to make an additional estimated tax payment
as soon as you know about the extra income, rather than waiting
for April 15 (or alternatively, file as early as possible).

Steve

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I've always wondered about this one.

Assume the following:

*You made the contribution to your employer's 401k in 2008.

*In 2009, your employer refunds a portion of that contribution to you
(e.g. for top heavy plan reasons).

As I recall, the amount refunded will be considered income to you for tax
year 2008 even though you didn't receive it and had no way of knowing
about it in 2008.

Suppose that because of the refund, you failed to pay enough estimated tax
in 2008 to avoid an underpayment penalty. If it had not been for the
refund, you would have paid enough.

How can you be expected to be able to properly calculate your estimated
tax if you aren't clairvoyant enough to know in advance if or how much of
your 401k money will be refunded to you?

I understand you can use the safe harbor rule, etc. But assume that you
don't want to use that method because it would cause you to significantly
overpay.

Thanks for any help on this one!
-----



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