Tax withholdings, estimated payments or a combination of the two, can "help avoid a surprise tax bill at tax time," according to the IRS. What to know about the 'safe harbor' rules One way to avoid penalties is by following the "safe harbor" rule, which means "you're meeting that [...
It is possible to avoid penalties for missed estimated tax payments by meeting “safe harbor rules” from the IRS, explained Sheneya Wilson, a certified public accountant and founder of Fola Financial in New York. You meet the safe harbor rules by paying at least 90% of the current year's...
Pay 100% of the tax shown on your prior-year tax return before applying estimated payments, withholding, or refundable tax credits. If your adjusted gross income is more than $150,000 (or $75,000 if you're married and file a separate return from your spouse), the safe harbor is 110%...
estimated tax payments can be helpful. These quarterly payments can cover the costs related to income tax and self-employmenttax– which also includes taxes for Social Security and Medicare – throughout the year (instead of in one lump sum at the time of ...
it is unclear why Congress would have provided only for tax forgiveness when a tax deduction for many taxpayers might be more valuable from a cash flow perspective, particularly when taking into account that taxpayers may have counted on those deductions when determining 2020 estimated tax payments....
on your prior-year tax return before applying estimated payments, withholding, or refundable tax credits. If your adjusted gross income is more than $150,000 (or $75,000 if you're married and file a separate return from your spouse), the safe harbor is 110% of your prior...