if you pay your previous years liability or, have paid in 90% of the taxes you owe for the current year there is no penalty
The IRS took my money. :(
by Elsewhere 78 Replies latest jw friends
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drwtsn32
isaacaustin, unless it changed recently, this isn't quite true. Even if you pay the full amount when filing your taxes, you'll still need to do quarterly estimated if you expect to pay that again the next year or you'll be penalized. This happened to me. TurboTax clearly warned me too. Now this was probably 8 years ago... maybe it did change...
BTW, I am talking about a severe underpayment at the time your taxes are filed: not total taxes due. And yes, if you paid a large amount of it throughout the year, either by withholding or through estimated tax payments, then the penalty may not apply.
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BurnTheShips
IRS workers see double standard on tax errors:
The Treasury secretary, who oversees the IRS, didn’t pay all his taxes. Neither did five other top nominees for the Obama administration, or their spouses.
Now, as Wednesday’s tax deadline looms, some Americans are wondering why they should comply with the arcane requirements of the Internal Revenue Service when top administration officials failed to do the same. Even some IRS employees are upset at what they see as a double standard.
The most criticized example has been Treasury Secretary Timothy Geithner, who admitted not paying $34,000 in payroll and Social Security taxes, saying his failure to pay was an oversight. Five other nominees disclosed similar tax issues, including one as recently as two weeks ago when Kathleen Sebelius, President Barack Obama’s pick for secretary of health and human services, admitted she didn’t pay $7,040.
“Our members are upset and angry,” said Colleen Kelley, president of the National Treasury Employees Union, referring to concern bubbling up within the IRS over unusually strict rules that can cost agents their jobs if they make a mistake. In some cases, IRS employees have lost jobs for simply filing a late return or failing to report a few hundred dollars of interest income.
Instead of loosening the rules for IRS employees, though, shouldn’t we tighten them for the folks at the top? And — just maybe — simplify the tax system to reduce the chance — or the excuse — of honest errors?
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drwtsn32
simplify the tax system
Yes.
I think a significant reason for the "complexity" in the tax code is due to the rules for the thousands (?) of tax breaks that affect certain people/organizations here and there. Everyone wants their situation to warrant an exception to paying tax. If we switched to a national sales tax system (for example) and eliminated many/most of the tax credit situations, it would be fought by many people afraid of losing those exceptions...
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isaacaustin
I can not remember what when what I stated above became the case...but it is accurate for years now.
The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will have paid enough tax to avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special rules for farmers and fishermen. Please refer to Publication 505, Tax Withholding and Estimated Tax, for additional information.
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leavingwt
Remember, when you pay MORE taxes, you're being patriotic. (According to Joe.)
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drwtsn32
isaacaustin, that's exactly how I understood it. We are actually saying the same thing, I believe.
If you grossly underpay throughout the year (by not withholding enough and/or not paying estimated quarterly taxes), you can be penalized. But this seems to be waived the first time it happens. If it happens again the following year, the penalty applies.
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leavingwt
Commentary at CNN: Why Your Taxes Could Double
http://www.cnn.com/2009/POLITICS/04/15/walker.tax.debt/index.html
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Elsewhere
> If you guys are smart enough to make money on investments now adays , well then my hat's off to ya
I cashed out the investments just before the crash. I got lucky.
> Elsewhere, did you take advantage of the "$7500 first time home buyers credit"?
I was within the eligible time frame, but my income was too high. Its not that I "make" too much money, it's just that when you add my paycheck income with my "cashed in investments income", I go above the qualifying income line. Ya just can't win.