how to reduce estimated tax penalty using long form on amended return

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Subject Author Date how to reduce estimated tax penalty using long form on amended return removeps-groups@yahoo.com 09-23-2009  Re: how to reduce estimated tax penalty using long... Alan 09-24-2009  Re: how to reduce estimated tax penalty using long... ed 09-24-2009   Re: how to reduce estimated tax penalty using lon... Steve Pope 09-25-2009  Re: how to reduce estimated tax penalty using long... Mark Bole 09-25-2009  Re: how to reduce estimated tax penalty using long... Alan 09-25-2009  Re: how to reduce estimated tax penalty using long... ed 09-25-2009  Re: how to reduce estimated tax penalty using long... LoTax 09-26-2009  Re: how to reduce estimated tax penalty using long... LoTax 09-26-2009  Re: how to reduce estimated tax penalty using long... Alan 09-26-2009  Re: how to reduce estimated tax penalty using long... Dan Lanciani 09-26-2009  Re: how to reduce estimated tax penalty using long... Alan 09-26-2009  Re: how to reduce estimated tax penalty using long... LoTax 09-27-2009  Re: how to reduce estimated tax penalty using long... HLunsford 09-27-2009
Posted by removeps-groups@yahoo.com on September 23, 2009, 10:28 pm Please log in for more thread options The original tax return has tax due of about $30,000. The estimated tax penalty is left blank but the IRS calculates it to be $1,000. However, about a year later the return is amended. As a good part of the income was earned in Q4 (9/1 to 12/31), so the tax return is recalculated with form 2210 long method and Schedule AI. The estimated tax penalty is found to be $500. The taxpayer writes to the IRS on form 843 and explains the above and requests a refund of $500. The request is denied with the words "We can't change your estimated tax penalty because the penalty is based on the tax shown on your original return. Even if you file an amended return or if the Internal Revenue Service adjusts your tax, we can't change the amount of the penalty". Seems unreasonable. The taxpayer should get back the $500 plus interest. What can one do now? -- << ------------------------------------------------------- >> << 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 Alan on September 24, 2009, 12:16 pm Please log in for more thread options removeps-groups@yahoo.com wrote: > The original tax return has tax due of about $30,000. The estimated > tax penalty is left blank but the IRS calculates it to be $1,000. > > However, about a year later the return is amended. As a good part of > the income was earned in Q4 (9/1 to 12/31), so the tax return is > recalculated with form 2210 long method and Schedule AI. The > estimated tax penalty is found to be $500. > > The taxpayer writes to the IRS on form 843 and explains the above and > requests a refund of $500. The request is denied with the words "We > can't change your estimated tax penalty because the penalty is based > on the tax shown on your original return. Even if you file an amended > return or if the Internal Revenue Service adjusts your tax, we can't > change the amount of the penalty". > > Seems unreasonable. The taxpayer should get back the $500 plus > interest. > > What can one do now? > It may seem unreasonable but the interpretation appears to be correct. Estimated tax penalties are to be based on an original return. An amended return can only be considered an original return if it is filed by the due date (including extensions) of the original return. If you filed your amended return after the due date, it will be disregarded for purposes of calculating an estimated tax penalty. I am not aware of any ruling that would allow the IRS to refund an estimated tax penalty based on anything other than an original return under the set of circumstances you have identified. Maybe some other tax pro is aware of such a ruling. -- << ------------------------------------------------------- >> << 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 ed on September 24, 2009, 7:31 pm Please log in for more thread options > removeps-gro...@yahoo.com wrote: > > The original tax return has tax due of about $30,000.  The estimated > > tax penalty is left blank but the IRS calculates it to be $1,000. > > > However, about a year later the return is amended.  As a good part of > > the income was earned in Q4 (9/1 to 12/31), so the tax return is > > recalculated with form 2210 long method and Schedule AI.  The > > estimated tax penalty is found to be $500. > > > The taxpayer writes to the IRS on form 843 and explains the above and > > requests a refund of $500.  The request is denied with the words "We > > can't change your estimated tax penalty because the penalty is based > > on the tax shown on your original return. Even if you file an amended > > return or if the Internal Revenue Service adjusts your tax, we can't > > change the amount of the penalty". > > > Seems unreasonable.  The taxpayer should get back the $500 plus > > interest. > > > What can one do now? > > It may seem unreasonable but the interpretation appears to be > correct. Estimated tax penalties are to be based on an original > return. An amended return can only be considered an original > return if it is filed by the due date (including extensions) of > the original return. If you filed your amended return after the > due date, it will be disregarded for purposes of calculating an > estimated tax penalty. I am not aware of any ruling that would > allow the IRS to refund an estimated tax penalty based on > anything other than an original return under the set of > circumstances you have identified. > > Maybe some other tax pro is aware of such a ruling. > > -- > << ------------------------------------------------------- >> > << 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 atwww.asktax.org.                 >> > <<         Copyright (2007) - All rights reserved.         >> > << ------------------------------------------------------- >>- Hide quoted text - > > - Show quoted text - Your problem is that you calculated the penalty on the basis of the ammended return. Send them a form 2210 AI based on the original return. There are so many ways annualization can defer tax installments you might find even more than the $500 reduction you sought with an ammended return. Some suggestions: Compute Itemized Deductions Schedule A for each quarter, and use the Standard Deductiion for any quarter it is more advantageous, even if you didn't itemize on your final returkn. Apply withholding that was withheld up to the due-date of each installment (15th of following month. Apply Credits and Deductions as early as they are earned. Apply carryover losses in the first quarter. Allow the Capital loss $3,000 limitation to annualize to $12,000. Compute AMT for each quarter. Get an independant form 2210 tax calculator (they're available to download from the web) instead of, or in addition to Pulbication 505 or your tax program (which is usually not as aggressive). ed -- << ------------------------------------------------------- >> << 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 Steve Pope on September 25, 2009, 1:17 am Please log in for more thread options >Normallly you woulld submit the 2210 AI with a reply to the IRS notice >of penalty due. Otherwise use form 843. The 2210 does not have to >accompany the original 1040 return. Bur, YOU must figure the penalty. >on the 2210. I agree that in the past this has worked -- you could leave the 2210 off yor return, letting the IRS figure the penalty, and if the penalty is too high, then send the 2210 in ex-post-facto. They'd even conveniently include the 2210 form with the penalty notice. However, Pub 505 (March 2009), page 55 states you must file form 2210 *with* your return for several of the most impotant scenarios, including using the annualized income method. So I am suspicious that they have tighetend up the procedure recently. Steve -- << ------------------------------------------------------- >> << 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 Mark Bole on September 25, 2009, 8:29 am Please log in for more thread options Steve Pope wrote: > Steve > THANK YOU for trimming the previous posts in your reply, including multiple copies of the newsgroup sig. -Mark Bole -- << ------------------------------------------------------- >> << 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 How long for a refund on an amended 2007 return? 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