|
Posted by valentino on May 13, 2008, 7:13 pm
Please log in for more thread options
TY 2007 I owed $20,000 in taxes. This year I am paying $5,001 in four equal
estimated tax for a total greater than $20,000.
In 12/2008 I want to sell a large capital gain position, a million, that
moves my due tax for TY 2008 at $160,000.
How and which of my quarterly estimated taxes should I change to avoid
underpayment and penalties? The new estimated taxes are to cover for the
110% of past year owed tax and the once large cap gain increase to occur
sometime in December. I already paid the 4/15 estimated ($5,001)
Thanks, Alex Turchina
--
<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
|
|
Posted by removeps-groups@yahoo.com on May 14, 2008, 12:26 am
Please log in for more thread options
> TY 2007 I owed $20,000 in taxes. This year I am paying $5,001 in four equal
> estimated tax for a total greater than $20,000.
> In 12/2008 I want to sell a large capital gain position, a million, that
> moves my due tax for TY 2008 at $160,000.
>
> How and which of my quarterly estimated taxes should I change to avoid
> underpayment and penalties? The new estimated taxes are to cover for the
> 110% of past year owed tax and the once large cap gain increase to occur
> sometime in December. I already paid the 4/15 estimated ($5,001)
Should you be paying 110% of 20k, or 5.5k each quarter to be in safe
harbor?
Are there state taxes as well? If so, see the recent thread (about a
month ago) about being optimistic on state 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. >>
<< ------------------------------------------------------- >>
|
|
Posted by joeu2004 on May 14, 2008, 1:36 pm
Please log in for more thread options > The new estimated taxes are to cover for the 110%
> of past year owed tax and the once large cap gain
> increase to occur sometime in December.
Whether it should be at least 100% or 110% of last
year's total tax depends on last year's AGI, not on
the taxable income this year including the
unanticipated capital gain.
> TY 2007 I owed $20,000 in taxes. This year I am
> paying $5,001 in four equal estimated tax for a total
> greater than $20,000.
There was no reason for you to pay "a total greater
than $20,000" -- at least, not just $4 greater.
> How and which of my quarterly estimated taxes should
> I change to avoid underpayment and penalties?
Since you apparently decided that 100% was safe enough,
there is no need to alter your estimated tax payments
to avoid underpayment penalties per se.
Moreover, I believe there is something to be said for
keeping estimated tax payments equal throughout the
year. I believe it makes it easier to determine that
you meet the safe harbor requirements.
However, if you would like to "avoid underpayment"
-- that is, avoid owing a large amount when you file
your tax return next year -- I would simply fill out
a mock Form 1040, including the capital gain, to
estimate this year's total tax, subtract the amount
of taxes paid with estimated tax payments to-date
and through withholding for the year, and divide
that difference by the number of remaining estimated
tax payments to determine the estimated tax payment
for the remainder of the year.
On the other hand, if you are now questioning your
decision to pay only 100% of last year's total tax
in the first place, I would fill out a mock Form
2210 to determine what you need to do moving forward
to avoid an underpayment penalty, if any.
Having said that, I should note that in my
experience as a taxpayer, the underpayment penalty
has never been so large that it is worth worrying
about, as long as I had made a good-faith effort
initially to estimate my tax liability. The most
I have paid in penalties was less than 1% of the
total tax. And that was in a year when the taxes
paid throughout the year wer inadvertently and
inexplicably less than 60% of the safe-harbor
requirement.
I never worry about owing significant amounts at
filing time. I account for that in my cash
management. In other words, I try to ensure that
I keep in savings what I expect to owe.
--
<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
|
| Similar Threads | Posted | | estimated taxes safe harbor | September 3, 2007, 10:14 am |
| Re: estimated taxes safe harbor | September 5, 2007, 10:58 am |
| Re: estimated taxes safe harbor | September 5, 2007, 10:58 am |
| Re: estimated taxes safe harbor | September 8, 2007, 12:26 am |
| Re: estimated taxes safe harbor | September 9, 2007, 10:09 pm |
| Re: estimated taxes safe harbor | September 10, 2007, 6:58 pm |
| Re: estimated taxes safe harbor | September 16, 2007, 3:27 am |
| estimated taxes safe harbor | January 15, 2008, 7:46 pm |
| 401(k) safe harbor plan | April 15, 2007, 1:03 pm |
| Safe Harbor Percentage? | March 7, 2008, 10:05 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap