Went to instructions for 1040 to check on the requirements for paying estimates in order to avoid penalty.
The wording is confusing to me -- the exception has words to the effect of no penalty if paid 110% (non-farmer) on time and then a clause concerning gross income on '06 form. It seems to imply the exception only applies for incomes that previously exceeded that limit--is that really so?
Question arises in an advisor to self-employed son advised him to not pay estimated's this year because, as I understand it, his last year's liability was so little. This year he has a decent (~$50k) gross but has a cash flow problem at the moment. I was suggesting he should make an estimated fourth quarter that was 110% to avoid penalty but now I'm not sure that would have any effect????
Does this cover self-empolyment portion as well as income as well?
I'm the farmer and have paid estimated's all along, so this is a new arena to me...