JotikaT2
Employee Tax Expert

Get your taxes done using TurboTax

It depends.  The safe harbor rule is essentially calculated based upon your prior year tax as compared to your current year expected tax liability.  

 

Typically, if you pay in (via estimated tax payments or withholdings) at least 90% of your current year tax or 100% of your prior year tax, you should not face any sort of underpayment penalties.  If you expect your adjusted gross income to be over $150,000, then the threshold of prior year tax goes up to 110% instead of 100%.  Your payments each quarter should be spread equally as it is assumed your income is earned equally over the year.  There is an option to annualize your income if you expect your income to go up just in the last quarter of the year.  

 

Please see how to avoid penalties for underpayment of taxes for a more detailed explanation as well to assist.

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