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Tag Archive for Underpayment penalties

Tips To Avoid Tax Penalties For 2017

With the arrival of the holidays, we are thinking about family get-together’s, holiday gifting and parties. But right behind the good times is tax season. Before you get busy with holiday festivities, take the time to consider a couple of things you can do now to avoid or reduce potential penalties on your 2017 tax return.

Underpayment Penalty

If you are a wage earner, you may not have had enough income tax withheld from your paycheck to meet your tax liability for the year. Or, if you have wages and also have taxable income from other sources such as investments, a second job or a side business, or if you are married and your spouse is also employed, your withholding for the year may not be enough to cover your 2017 tax liability. Read more

Increase Your Withholding To Avoid Underpayment Penalties

Uncle Sam considers our tax system a “pay-as-you-go” system and expects taxpayers to prepay taxes on income as they receive it throughout the year. Taxes are prepaid through withholding and by estimated tax payments.

Since withholding is not an exact science and estimated tax payments are—just as the title suggests—estimates, the IRS, and most states, provide safe harbor payments that a taxpayer can make through a combination of withholding and estimated payments that will ensure no underpayment penalties are assessed.

There are two federal safe harbor amounts that apply when the payments are made evenly throughout the year. Read more

Avoiding IRS Underpayment Penalties

Congress considers our tax system as a “pay-as-you-go” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-go” requirement. These include:

• Payroll withholding for employers;

• Pension withholding for retirees; and

• Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding.

When a taxpayer fails to prepay a safe harbor (minimum) amount, he or she can be Read more

Individual Estimated Tax Payments 2015 Start Soon

Article Highlights:

• Pay-as-you-go tax system
• Tax law changes affecting estimates
• Underpayment penalties
• Safe harbor estimates

Our tax system is a “pay-as-you-go” system, and if your pre-paid amount is not enough, you become liable for non-deductible interest penalties. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-go” requirement. The primary among these include: Read more