Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 11-06-2008, 01:04 PM
TaxGuru's Avatar
Tax Guru
 
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,398
Blog Entries: 3
How can a Taxpayer avoid the underpayment penalty?

Taxpayers who faced the underpayment penalty in 2007, should take the time do some year end tax planning with their CPA's in late November or December to avoid these punitive penalties.

The strategy is really straightforward in that taxpayers should generally increase their federal and state withholding from their regular paycheck for the remaining 2 months of 2008.

To avoid this penalty, taxpayers should do one of the following;

1. pay at least 90% of this years tax liability,that is for the tax year 2008!

2. pay 100% of prior years (tax year 2007) tax liability, but if the taxpayers AGI is in excess of $150,000 they would need to pay at least 110% of 2007's tax liability.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
When is a taxpayer not required to pay estimate taxes and safely avoid any penalties? TaxGuru Estimated Taxes 0 09-16-2008 01:02 PM
Roth IRA – Withdrawal and Penalty lwebinc IRA/Sep 1 07-14-2008 12:22 PM
IRS reduces Interest Rate on underpayment by 1% for 1st Quarter 2008! TaxGuru Estimated Taxes 0 11-29-2007 01:15 AM
Can a taxpayer effectively plan to avoid paying AMT taxes? Adam Alternative Minimum Tax 1 07-30-2007 04:48 PM
How one can avoid the 10% penalty for early withdrawal of funds from an IRA? gimini IRA/Sep 2 04-08-2007 11:36 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning