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Posted by Scared@OfIRS.com on March 27, 2008, 11:15 pm
Please log in for more thread options Phil Marti wrote:
>
>> Due to little income I did not turn in Federal taxes
>> for FY 2005 & FY 2006. However due to redemption of
>> US Savings Bonds and selling some stock (all in 4th qtr),
>> I have to pay taxes.
>>
>> How does the IRS deal with the fact that I didn't
>> pay estimated taxes?
>
> Absent any other information, they assume equal income and deductions
> throughout the year.
>
>> Using TurboTax it has added
>> a small amount for as "Estimated Tax Penalty".
>> Do I pay this "estimated" amount?
>
> The amount isn't estimated, it's calculated based on the above assumption.
> Because your income was all lumped at the end of the year, you can reduce or
> eliminate the penalty by completing Schedule AI of Form 2210 and attaching
> it to your return.
In TurboTax was playing around with Form 2210 (Underpayment of Est. Tax)
and I checked "Check if you had no tax liability for 2006", and the
penalty disappeared. Does this make sense for me to do? If so, should
I still attach Schedule AI (I can do it easily with TurboTax)?
>> Also, if I don't expect to pay taxes in FY 2008,
>> will I need to submit estimated taxes in 2008
>> because of my 2007 taxes?
>
> No. Each year stands alone.
Great to know... this always confused me.
Thanks Phil!
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