Seriously, my last tax post (Re: Estimated tax payments)

[Homer]

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Thanks. Ugh, looks like I screwed myself out of about $500.

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Just for clarity, I meant 5% of the amount you underpaid by. So maybe that is 10k and you have a $500 penalty or maybe not.

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Right, I didn't pay any estimated taxes and expect to owe ~$9K.

[balkii]

regarding the late payment penalty,
what my CPA told me was:

dont calculate the penalty or pay it on your return. let them catch it, and pay up if they do. if this is your first year filing taxes on poker winnings that you didnt pay throughout last year, you might very well not have to pay any penalties (ie claim ignorance of the need for quarterly payments).

[balkii]

Anyway, I think I'm just going to send in a little over 25% of what I think I'll owe for the year every pay quarter. THe worst thing that happens would be I pay too much. If I end up overpaying I'll get that back when I file next year, right?


hey london, I recommend NOT doing this. as i said earlier, your required quarterly payments this year will be only last years tax liability divided by 4. i assume you plan to make more this year.

what i am doing is saving the amount i think i'll owe for the whole year, sending them the minimum quarterly payment, and putting the remainder into an ING account where it can make money for me instead of the feds.

[Glenn]

If I recall correctly, the penalty is not on everything you owe this year, it's on what you should have paid in estimated taxes. You are only expected to pay estimated taxes based on the previous year's tax liability. Therefore, if you owe 10k this year, but you only owed 3k last year, you only have to pay the penalty on that 3k, and you can pay the rest without penalty. That is, if I recall correctly.