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| *Loan,banking and credit>>>income tax |
Can I skip early estimated tax payments if income comes late in year? |
I have a significant stock sale that will occur in November. Income from this sale will create withholdings < 90% of my 2007 taxes. I cannot take advantage of safe harbor b/c last year's tax was very high. If I make an estimated tax payment after the sale in November, will I be penalized for not making payments in previous 2007 quarters? If so, is there anything I can do to prevent this? I assume your withholding covers the other taxes you owe. If not, read the instructions to Form 1040ES and send in payments in September 2007, and January 2008. You can avoid the penalty and the need for Form 2210 by paying the correct amount of estimated tax by Janury 15, 2008 on the November capital gain. When you have an uneven distribution of income throughout the year, you do not have to consider your income as evenly distributed for purposes of computing estimated taxes. Use the Annualized Estimated Tax Worksheet that appears in IRS Pub 505: http://www.irs.gov/pub/irs-pdf/p505.pdf... After computing the amount of tax to send in, send in your payment using Form 1040ES using only Payment Voucher 4: http://www.irs.gov/pub/irs-pdf/f1040es.p... Or, if you don't want to do the worksheet, just send in 15% of your gain (assuming this is long-term gain) with the voucher, by January 15. The IRS will see that your gain came from a late year sale in Schedule D and you should not be hearing from them about a late payment penalty. File an annualized 2210 with your tax return. You can make a 4th quarter estimated payment (January) even though you didn't make the first three, without penalty, if that's how your income came in. |
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