Underpayment of Tax For Year 2016

Feb 13, 2017 4 Replies
T

I am not a tax professional...



Based on the 1099-DIV forms that I have received I will probably owe several thousand dollars of additional federal tax to the IRS for the year 2016. This additonal amount is more the 90% of the tax withheld in 2016, 100% of the tax paid last year, etc. etc.



If I mail in this additional tax owed with form 1040-ES by 04/18/17 I will not have to pay interest penalty to the IRS, right? (Page 2 of instructions.)



What if I mail in the additional tax owed with my 1040 by 04/18/17 instead of using form 1040-ES?


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T

Oops, I think I misread the instruction for form 1040-ES. I should have paid the additional tax by mid-January 2017...

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I

If you pay the tax by 4/18 you won't owe interest, but you may have an underpayment penalty. I would assume from your post that the dividend surprise was due to end-of-year mutual fund distributions. If so, you may be able to avoid an underpayment penalty by using the annualized income method to complete Form 2210.

Ira Smilovitz

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P

If you do owe estimated tax payment(s) subject to underpayment penalty, that penalty accrues, at prevailing interest rates, from the due date(s) of the estimated payment(s) to the date(s) payment(s) are made, or to the due date of the return. Paying sooner rather than later may mitigate the penalty.

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