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Old 04-04-2014, 02:56 PM
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New extra income

In 2013, my husband and I earned about $120,000 in salary and interest, used the standard deduction, and got an $800 federal refund.

In 2014, we will be earning about $125,000 in salary and interest, and will be itemizing for a higher deduction (bought a house).

The rate of withholding from our salaries is the same, our interest income the same, the deduction higher. But this year I will be earning about $15,000 net profit from a business I just started in January 2014. No outside income like this in any previous year.

Do I need to pay estimated taxes or will this fall under the "safe harbor" since my withholding in 2014 should equal or exceed my withholding from 2013, plus I will have a higher deduction?



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Old 04-04-2014, 09:48 PM
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Quote:
Originally Posted by jennem View Post

Do I need to pay estimated taxes or will this fall under the "safe harbor" since my withholding in 2014 should equal or exceed my withholding from 2013, plus I will have a higher deduction?
depends on your agi ; The combined total withholding and estimated payments you make each quarter should be NO LESS than 25% of either:1)100% of the tax shown on your2013 year return or 2)90% of the tax shown on your current year 2014, return.HOWEVER, If your AGI for 2014 ‘d be more than $150K , substitute 110% for 100% in (2) for 2013 above.

first,

;second.if you expect it it ‘d be income that fluctuates during the year, then you need to so called annualize your income by monitoring your income and expenses during the year and base your estimated payments on actual income rather than on estimates.tax liability is after subtractions of estimated tax/refundabhle credits on 1040



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Old 04-05-2014, 11:28 AM
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Sorry, I can't quite understand your answer any more than I can understand the IRS page. To break it down.

1. Our AGI will not exceed $150K.

2. We will have higher salary income at the same withholding rate, so our withholding for 2014 should definitely exceed our withholding for 2013.

So that means no penalty if I don't make estimated tax payments this year under "safe harbor," correct?



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Old 04-05-2014, 04:34 PM
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Originally Posted by jennem View Post
.

We will have higher salary income at the same withholding rate, so our withholding for 2014 should definitely exceed our withholding for 2013.

So that means no penalty if I don't make estimated tax payments this year under "safe harbor," correct?
then correct; i said IF, " If your AGI for 2014 ‘d be more than $150K , substitute 110% for 100% in (2) for 2013 above.
"To avoid the penalty, you will need to pay in "at least 90% of the tax for the current year,2014, or 100% of the tax shown on the return for the prior year, 2013,whichever is smaller



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