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Posted by Mike Wellman on June 26, 2007, 12:19 am
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>> You do not need to pay estimated taxes if you think you
>> are getting a refund.
> I believe that is incorrect, if by that, you mean that you
> can escape underpayment penalty when you make insufficient
> timely tax payments throughout the year. From the 1040
> instructions for line 77 (2006): "You may owe this penalty
> if ... [y]ou did not pay enough estimated tax by any of the
> due dates. This is true even if you are due a refund".
>
> I presume you did not mean the absurd interpretation that no
> one "has to" pay taxes, much less estimated taxes. That is
> like saying: "no one 'has to' stop at stop signs or red
> lights". The statement is true. But a person will suffer
> the consequences, if they do not abide by the law.
>
> The tax law requires that we pay estimated taxes in a timely
> manner through the year or suffer the consequences
> (penalty), whether or not we expect a refund.
With all due respect, to use an extreme example, say you
made $1,000,000 in 2006 and based on that, the software
calculates that you need to make estimated tax payments for
2007 of $350,000. However, in 2007, you estimate that your
income will only be $25,000. Are you saying he still needs
to make estimated payments of $350,000? Of course not. You
make adjustments to your withholding based on current
circumstances. You are not required to make the government
interest free loans.
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