Can 2014 withholding before Jan 15. count toward safe harbor

Yes, and yes.

The underpayment of estimated tax "penalty" is really just an interest charge, currently at 3% annual rate, for only the months you were underpaid. I don't have all the rules memorized, but if your total balance due is less than $1,000 and all your payments were through withholding, that is also a safe harbor.

It doesn't appear from what you say that the amount would be anything to lose sleep over, in fact sometimes the IRS doesn't even bill when relatively small amounts are involved and you don't file Form 2210.

Thank you Mark. I appreciate your reply, but I'm sorry it's still not clear. You've incorrectly assumed that my underwithholding is less than $1000, and you didn't actually answer by question because yes and yes is contradictory.

For the sake of argument assume that it's $2000 and that is the same amount that will be withheld from my Jan 3, 2014 paycheck.

Does the amount included on Form 2210 Line 19 Miniworksheet for Taxes Paid and Withheld for 2013 item b column d include this $2000 or not. If it does, then I don't owe estimated taxes. If it doesn't then I do.

I'd appreciate it if anyone can answer this simple question. The instructions aren't clear because though it says amount withheld before Jan 15th, the Jan 3rd withholding is for 2014 not 2013. I'm not sure if they are considered separate "accounts".

Thanks in advance for any more replys

"Does it matter that the Jan 3rd paycheck withholding is for 2014?"

Yes, it makes the withholding on that paycheck *totally irrelevant* to the 2013 penalty and safe harbor. It will be 2014 withholding, case closed, open and shut, door slammed.

By the way: Where did you read - did you *really* read somewhere? - that *witholding up to January 15th counts toward the prior year*? I sure hope this isn't in the IRS instructions!!!

I still have to make an estimated payment?

I made no such assumption, I simply said "if your total balance due is less than $1,000". "If" means "if", not "I assume".

My answers to your two questions were indeed consistent. Yes, it matters that the the Jan 3rd paycheck withholding is for 2014, that means it counts for 2014, not 2013. Yes, you still have to make an estimated payment.

amount that will be withheld from my Jan 3, 2014 paycheck.

Paid and Withheld for 2013 item b column d include this $2000 or not.

I have no idea what "item b column d" of Line 19 refers to, I could find nothing labeled "item b". However, only your 2013 withholding counts for

2013 calculations, so no, the $2K withholding in 2014 does not get included.

As I answered originally, yes you need to make an estimated payment if you wish to avoid a nominal late interest charge.

You're welcome.

The instructions say nothing about "amount withheld before Jan 15th". The instructions talk about estimated payments, not withholding, made by Jan 15th. The instructions say to take your total withholding for the calendar year (in other words, withholding made between Jan 1 and Dec

31, as entered on Lines 62 and 69 of the Form 1040) and divide it by four and then enter that one-fourth amount in each column. Then you also add the estimated payments made during the date range for each column to the one-fourth of annual withholding.

The example that accompanies Line 19 instructions should make this clear.

I don't know what kind of money we're talking about, but if you think it's worth your time there are two things you can investigate which may reduce or, possibly, eliminate the penalty.

1. The default treatment of withholding is to credit it equally to the four ES periods. You can elect to have it credited in the amounts actually withheld.
2. You can explore the annualized income method of calculating required payments. This is probably your best shot, especially if a large portion of your income is received late in the year.

The 2210 instructions seem to have confused you at times. You might want to spend the time reading a more thorough explanation in Publication 505.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

The Chapter 3 (Credit for Withholding and Estimated Tax) of Publication 505 seems to indicate that only withholding on a 2013 W2 counts.

Our withholding is weighted toward the beginning of the year. We were within the safe harbor for 4/15, 6/15 and 9/16 if the withholding was income were treated as when paid. Normally we make the safe harbor by 12/31 too. I didn't catch this in time to increase my withholding.

I guess I'll just make an estimated payment.

Thanks Phil, and thanks to everyone else who tried to explain it.