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Posted by Katie on June 18, 2007, 9:27 am
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> Does the Calif estimated tax penalty apply even if you are
> due a refund, as does the federal estimated tax penalty?
>
> Instructions for line 67 of 2006 Form 540 does not state
> that explicitly, as do the instructions for line 77 of 2006
> Form 1040.
>
> On the contrary, the instructions for line 67 state that if
> line 48 is less than $200 or less than 10% of line 30,
> "Stop. You are not subject to an estimated payment
> penalty".
>
> Line 48 is non-zero only if you owe taxes.
>
> I also looked at Form 5805 and it instructions, to no avail.
> But I might have overlooked something.
>
> If the Calif estimated tax penalty does apply even if you
> are due a refund, I would appreciate it if you would point
> me to the explanation of that fact.
Look at the bottom right-hand corner of page 18 of the Form
540 instructions. There is no penalty for underpayment of
estimated taxes if the total of your payments and credits
equals at least 90% of your current year liability, or 100%
(or 110% if high income) of your prior year tax liability,
or is less than $200.
These are the same as the federal rules except for the $200
exception. California generally conforms to IRC Sec. 6654,
but IRC Sec 6654(e)(1) does not apply (Cal. Rev. & Tax. Code
Sec. 19136(c) (1)). Instead, CRTC Sec. 19136(c)(2) provides
that no penalty is assessed if the total tax liability, less
payments and credits, is less than $200 ($100 for married
filing separately). So if no tax is due with the return, or
the tax due is less than $200, there is no penalty for
underpayment of estimated taxes.
Katie in San Diego
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