Taxes - safe harbor question

[kaneohe]

Quote:

Originally Posted by kaneohe I don't what the rules are when you have a filing status change (MFJ to single). .

I didn't know this so I asked the world and the answer is: it is a fraction of the MFJ number. See Pub 505 p.52-53 and the Exn p. 53. Perhaps things are ok already? https://www.irs.gov/pub/irs-pdf/p505.pdf

2015 joint return and 2016 separate returns.
If you file a separate return for 2016, but
you filed a joint return with your spouse for
2015, your 2015 tax is your share of the tax on
the joint return. You are filing a separate return
if you file as single, head of household, or married
filing separately.
To figure your share of the taxes on a joint
return, first figure the tax both you and your
spouse would have paid had you filed separate
returns for 2015 using the same filing status as
for 2016. Then multiply the tax on the joint return
by the following fraction:

The tax you would have paid
had you filed a separate
return/
The total tax you and your
spouse would have paid
had you filed separate
returns

[rayvt]

Quote:

Originally Posted by Texas Proud Senator is probably right.... as long as you paid the tax before year end a penalty will not be calculated...

Could be. But that's a case of them not bothering to enforce the rules, not a case of the rule not applying.

A large withholding late in the year conforms to the rules. A large quarterly payment doesn't. (Unless a large portion of your income was earned in the 4th quarter.)

[scrabbler1]

Before the ACA and its premium tax credits began in 2014, my federal tax bill was usually around $1,800. I had no withholdings from any of my investment income. I would pay about 1/3 of it as part of a 3rd quarter estimated tax payment, 1/3 of it as part of a 4th quarter estimated tax payment, and the rest the following April.


My goal was to make sure the check I wrote in April was under $1,000. I suppose that technically I owed something in penalties because I paid nothing for the first or second quarters in estimated taxes and I did have some income in that time. However, it was far less than 50% of my year's total income for two reasons: First, the first 2 quarters for estimated tax purposes is actually a 5-month period, not 6 months. (The number of months per Estimated Tax quarter is not 3-3-3-3 but 3-2-3-4.) That shifts 7/12 of my more regular monthly income to the last 2 quarters. Second, I have the more erratic cap gain distributions in the last 7 months of the year, further increasing my income in the last 2 quarters.


Since 2014, I have dropped the 3rd quarter estimated tax payment because my tax bill, after reducing it by the ACA tax credit (some years I did not take it in advance), dropped to either a little over $1,000 or a little under it. I would then pay about half of the remainder in the 4th quarter and half the following April (or just pay the whole thing in April if I owed under $1,000 total). The ACA credit is a tough moving target to determine because I don't get that 1095 form until after the 4th quarter payment is due.


I suppose I have been flying under the IRS's radar all that time, as I have never been contacted about any underpayment or late payment of taxes. Or, they simply don't care about amounts so low.