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Spin Zone / Re: Final tax bill
« on: March 04, 2019, 10:44:41 AM »If I recall correctly, if you owe anything at all, or it could have been more than a certain amount (very low amount, something like $500), then you must make quarterly estimated tax payments the following year and being short in ANY quarter triggers a penalty. I don't know if that's still true though, it's a vague memory from when my Mom was deep into this stuff. Wrote her own software to do people's taxes on the side in fact, in the days before Turbo Tax.There is no specific requirement to make quarterly estimates tax payments. However, whether you do or don’t depends on how much you owe on your returns.
Anyway I do the same thing as Nipple Boy because I've found it very difficult with the online W-4 calculators to get my withholding right (I have interest and rental income as well). I was withholding way too much for over half the year in 2018, and eventually calculated that if I just filed a new W-4 with zero extra withholding (sometime in September), I would still get a refund, so I did that. Figuring my taxes at the end of the year, it looked like I would actually owe a few hundred, but not sure if it's enough to require estimated tax this year. Now that I have the actual paperwork, I need to actually figure them... that's for spring break though (next week).
Right now I'm withholding about $100 too much according to the online calculators, but I'm leery of cutting it down because of this.
There is no penalty for underpayment if estimated tax if you:
1. Owe less than $1,000;
2. Pay in at least 90% of your CURRENT YEAR tax liability; or
3. Pay in at least 100% (or $110% if your prior year AGI exceeded $150,000) of the PRIOR YEAR tax.
So if you don’t have enough withheld to meet these exceptions to the penalty, you can either increase your withholding, OR pay
quarterly estimated tax payments.
And yes, you can earn a penalty in any quarter if you underpay your withholding and/or estimated tax payments.