Let's say for the sake of argument that I will benefit from a large (unexpected) source of income, not subject to withholding, in October of
2008 and that therefore not enough taxes will be withheld from my regular paycheck.If I am not mistaken, by the time I become aware of this situation (October 2008) it would be too late to file a 1040-ES for the year 2008. What other options do I have in order to avoid paying a possible penalty to the IRS?
Thanks.
Estimated taxes are due: Apr 15, June 15, Sept 15, Jan 15. An October windfall does not create an issue, you can make the payment in January.
Joe
Q4 estimated are due January 15 of the next calendar year. You have time to file an estimated tax payment.
On Mar 23, 9:46 pm, "Gil Faver" > (unexpected) source of income, not subject to withholding, in October of
You don't "file" a 1040-ES. You either use it to compute what you owe, or you use the 1040-ES voucher to transmit a payment. *IF* you had to pay an installment due to the windfall, it wouldn't be due until Jan
15 of 2009 and then you would have to complete and file a form 2210 and Schedule AI with your return to prove you didn't owe the extra deposit for an earlier installment.However, you probably don't owe anything at all. If your 2008 withholding is at least as much as your 2007 total taxes you don't have to pay the tax on the windfall until you file your return in April 2009, It's 110% of 2007 taxes if your 2007 AGI was over $150K. You can increase your withholding to cover this requirement.
Get an IRS form 2210 to see how this works or read any of the many explanations of Estimated Taxes available on the web.
ed.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.