Hi @MonikaK1 ,
Thank you for response.
I am still confused about what is considered to be tax liability. For my 2023 tax liability, would be #2 or #3 below?
For 2023,
- State tax withhold : ~67K
- State tax for income : ~46K
- State tax return after filing taxes : ~ -21K
For 2024,
4. State tax withhold : ~49K
5. State tax for income : ~105K
6. State tax underpaid and need to pay after filing taxes : ~56K
Based on your suggestion I checked my 5805 form and found that it is marked as previous year $500 rule exception. So, I think it is based on my 2023 tax liability were 46K -67K(#3 above, less than 500). Shouldn't it be based on #2 above ?
Also, based on FTB 5805 form instruction "Taxpayers with California adjusted gross income (AGI) equal to or greater than $1,000,000 (or $500,000 if married/RDP filing separately) must use the tax on their 2024 tax return to figure their penalty if they are subject to the underpayment of estimated tax penalty."
Since my AGI for California for 2024 is 1M, it should not be looking at 2023 tax year and only rely on 2024 tax return.
Let me know if my above understanding is incorrect.
I understand that FTB might send notice for penalty if they think it is needed. But issue is, I will not be able to do annualized income installment method at that time. If it would have been during tax filing I could have done annualized income installment method to reduce penalty.
