If I had a client with Federal Taxable income in 2007 of $4200, and his AGI income in 2008 is going to be $1,500,000, what is the least amount of estimated taxes they would need to pay to avoid penalties in 2008?
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In general, since your client's AGI in 2007 is greater than $150,000.00, he may use the safe harbour method, i.e., pay 110% of the prior year's tax, provided that the prior year was a 12-month period. IRC section 6654(d)(1)(C)Originally posted by bcombs View Post -
Bertrans apparently misread the facts.
Your client can base his 2008 estimated taxes on 100% of his 2007 tax, as long as his 2007 return covered a full 12 months, or would have covered the full year if he wasn't required to file a 2007 return.
Check his state's estimated tax requirement, as the rules may differ from the federal.Roland Slugg
"I do what I can."Comment
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Maybe I didn't. 2008 AGI is greater than $150,00.00; therefore, 110% of 2007 tax.
If not, what am I not seeing ?- and, I admit, that could be a lot.Comment
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Safe Harbor
Per TTB page 15-3
Safe Harbor. An estimated tax penalty will not apply if either of the following amounts is paid through withholding or estimated tax payments for 2007:
1. At least 90% of the tax shown on the 2007 tax return, or
2. 100% of the tax shown on the 2006 return (110% if 2006 AGI was greater than $150,000/$75,000 MFS).
An estimated tax penalty for tax year 2007 will not apply if:
The balance due on the individual's 2007 tax return is less than $1,000,
The taxpayer was a U. S. citizen and had no tax liability in 2006 for a tax year that covered 12 months.
Hope this helps.
LTOnly in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".Comment
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