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Old 09-04-2015, 07:00 PM
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can i avoid paying estimated taxes when 2015 AGI higher

Hello, Can I avoid paying estimated taxes should I insure that I pay taxes equal to or greater of 100% of tax liability of the last year (110% when married and filing jointly) by the end of this year by increasing my withholding with my employer? Asking this question as we sold some rental property this year and the gains from that are increasing our AGI of 2015 higher comapred to that for 2014. Just want to make sure that there will not be any underpayment penalty when I file my taxes next year. Thanks.



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Old 09-04-2015, 09:57 PM
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Hello, Can I avoid paying estimated taxes should I insure that I pay taxes equal to or greater of 100% of tax liability of the last year (110% when married and filing jointly) by the end of this year by increasing my withholding with my employer? =======>>if you do nt wan tto pay quarterly estimated taxes to the IRS/ State, then yes; you MAY adjust your withholding on your paycheck on W4 to cover any additional taxes from other income such as long term capital gain. You simply NEED to fill out a new Form W-4 with your ER, employer. You may adjust the number of withholding allowances on your W4; as you decrease your W/A, your ER ;d withhold more taxes from your paychecks; Or you MAY indicate an additional dollar amount to withhold each paycheck on your W4. To use either method you will first need an idea of how much extra taxes you'll be responsible for.Assume that the income tax and estimated tax on your LTCG will be $6Kfor the year, then, you May take this tax amount and divide it by the number of remaining pay periods in the year. This results in an additional of tax that you could withhold. You need to put the amount on F W-4 Line 6 as an additional amount to withhold. Howevr, there are actually MANY biz owners who intentionally do no pay quarterly estimated taxers due to the fact hat penalties/interest on underpayments of estimated taxes are minimal UMLESS their estimated payments are very high. Or you may want to use the annualized income installment method to compute your estimated tax payments for each period. Under this method, your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method.Once youchoose to use annualized methid, then, you'll have to file Form 2210 with your 1040.



Asking this question as we sold some rental property this year and the gains from that are increasing our AGI of 2015 higher comapred to that for 2014. Just want to make sure that there will not be any underpayment penalty when I file my taxes next year===> As mentioned above; Just for reference, your total tax payments made before before January 15th must add up to the lessor of these two amounts:
90 %of the tax you owe for the current year, or
100 % of the tax you owed for last year. If your 2015 AGI is expected to be more than $150K (more than $75K if married filing separately,) you need to substitute 110 percent for 100 percent.



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