Our tax system is "Pay As You Go" and not wait until the tax time. If you have a balance due more than $1,000 you may be assessed an Estimate Tax Penalty.
If you owe more than $1,000, there is a Safe harbor exception.
The "safe harbor" exception protects you from estimated tax penalty if you meet one of the following two conditions:
- 90% of current year's tax: If you have paid at least 90% of the total tax you will owe for the current tax year.
- 100% of the previous year's tax: If you have paid 100% of the tax shown on your previous year's return (110% if your Adjusted Gross Income was more than $150,000 ($75,000 if married and filing separately))
Waiver due to unusual circumstances
- Casualty, disaster, or unusual event
- Retirement on disability
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