If TXPYR cashes in a bond in December, will taxpayer be penalized for not sending in estimated taxes on it as it was cashed in January? In other words, does it matter on date of interest paid?
tks all
If TXPYR cashes in a bond in December, will taxpayer be penalized for not sending in estimated taxes on it as it was cashed in January? In other words, does it matter on date of interest paid?
tks all
The interest you receive in December by redeeming a savings bond is 2016 income. As such, that income is used in any calculation that computes whether you will owe an estimated tax penalty for the year. The 4th quarter 2016 payment is due 1/17/17.
bh2 - yes, you can reduce the underprepayment penalty, probably, because the interest was received near the end of the year. You'll need to use "Schedule AI - Annualized Income Installment Method" found on page 4 of IRS's Form 2210.
And if you've got trouble coping with the massive instructions for that form, you might try to read Internal Revenue Code Section 6654, which is even worse than the instructions with the form.
It can be done. Whether it's worth it to you is another question. Good luck.
In addition to the prior two replies, don't forget the possibility of the Safe Harbor applying to your benefit here.
interest was received near the end of the year. You'll need to use "Schedule AI - Annualized Income Installment Method" found on page 4 of IRS's Form 2210.
form, you might try to read Internal Revenue Code Section 6654, which is even worse than the instructions with the form.
However, there are exceptions which waive the underpayment penalities and interest. The OP may not know this.
/BAH
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