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Any Penalty on Under Withholding if Under $1000?

For 2015, my monthly withholding total for all of 2015 on my 1099-R will be about $3800 but my tax due will be about $4200. The estimated difference between tax withheld and tax owed will be about $400. My understanding is there is no penalty charged as long has the difference between withheld and owed is less than $1000.

FWIW, last year (2014) my withholding was about $6000 due to higher income so this year I won't qualify for the Safe Harbor of Withholding 100% of last year.

Am I correct in thinking that there will be no penalty as long as the difference between tax due and amount withheld is under $1000?

Reply to
njoracle
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Your 2014 withholding is irrelevant. The safe harbor compares your 2015 withholding with your 2014 total tax liability.

That's correct as long as you haven't made any estimated tax payments in

2015.

Also if your 2014 withholding + estimated taxes are at least 90% of your

2015 tax, there's no penalty.
Reply to
Barry Margolin

I always use withholding and never use estimated taxes and will be above

90% and less than $1000 so I should be okay. Thanks for responding.
Reply to
njoracle

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