So, even though I made four timely payments of estimated tax, and even though I paid more than 90%, will I be assessed a penalty for coming up short by $1267=========>>>>>>>> aaslongas you paid estimated taxes the SMALLER of 90% of the tax to be shown your tax return, or 100% of the tax shown on the previous year’s tax return,, no problem.however,
you must pay estimated tax when you expect your withholding and refundable credits to be LESS than the SMALLER of 90% of the tax to be shown your tax return, or 100% of the tax shown on the previous year’s tax return. You may have to pay a penalty when you do not pay enough taxes, either through automatic withholding or through the payment of estimated taxes, or a combination of both. For example, assume that You made estimated tax payments of $4k per quarter, thinking that $16k would be enough to cover 90% of your tax liability in a year when the prior year safe harbor wasn't available. It turned out that $18k was required to cover 90% of your tax liability, so you should have paid an additional $500 per quarter. The amount of your underpayment is $500 for the period from April 15 to June 15, $1k from June 15 to September 15, $1,500 until January 15, and $2k until April 15 when you filed your return with your payment. The underpayment penalty at the 8% rate in this situation would be roughly $107. the penalty can be very difficult to calculate. Unless you qualify to use its simplified method.the IRS will figure the penalty for you
Furthermore, if you do not pay enough taxes by the due date of each estimated tax payment, you may have to pay a penalty, even if you are entitled to a tax refund. There are some exceptions to the general penalty rules for underpaying estimated taxes. For instance, if your total tax is less than $1k, you will not have to pay a penalty for underpaying estimated taxes. Similarly, if you had no tax liability in the previous year ,you will not be subject to a penalty for underpaying estimated taxes.
(By the way, I did not pay 110% of last year's taxes, which would have been a "safe harbor" for me, but it was my lawyer who said $5256 would be enough...)===========> There are a number of simple steps that you can take to avoid underpaying your estimated taxes. If you do not underpay your estimated taxes, then you also will avoid any penalties imposed by the IRS for underpayment;If your income is less than $150k, make sure that your estimated tax payments, along with any tax withholding and refundable credits, will equal at least 100% of the total tax that you paid in the previous tax year.
But aslongas your income is more than $150k, then, your estimated tax payments, along with any tax withholding and refundable credits, will equal at least 110% of the total tax that you paid in the previous tax year.so, once you can correctly estimate your income for the current tax year, pay at least 90% of the tax that you will owe on your estimated income. However, this may be difficult or even impossible if you cannot accurately estimate your income for the year.