Search Results for: safe harbor

Penalty for Underpayment

If you don’t pay enough estimated tax, or don’t pay on time, you’ll have to pay a penalty. It’s best to avoid this penalty, of course — but you don’t have to lose sleep over it. The penalty is equivalent to nondeductible interest on the amount you underpaid, for the period of the underpayment. If […]

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How Much to Pay

Choose the appropriate method from among those described on this page to determine the amount of estimated tax to pay. Prior year safe harbor The same “prior year safe harbor” you use to determine whether you have to pay estimated tax (see Who Must Pay) can be used to determine how much you have to

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Who Must Pay

The general rule is that you have to pay estimated tax if your withholding and other tax credits are less than 90% of your tax liability (including the amount of alternative minimum tax you owe, if any). But there are two important exceptions: Tax due less than $1,000 You don’t have to make federal estimated

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