I know that the IRS gives you safe harbor from the under withholding penalty if you paid at least 100% of the tax owed in the prior year or 90% of the tax owed in the current year. Do these exceptions also apply if you will be requesting an extension and filing later?
I know that my withholding for the 2023 tax year is at least 100% of what I owed for the 2022 tax year. I will be requesting an extension and filing later because I am waiting for a form K-1 from the executor of my sibling's estate. Since my with holding meets the 100% requirement will I have no penalty due if my with holding did not cover what I owe for 2023, and I have to make an additional payment when I file the return after April 15th but before the October deadline?
You must make a payment by April 15th that will bring you up to 90% of your current years (2023) taxes.
You must make a payment by April 15th that will bring you up to 90% of your current years (2023) taxes.
that 100% is 110% if your 2022 adjusted gross income was over $150k (1/2 that if married filing separate). taxes are due on 4/15.so you would be safe from underpayment penalties if you meet the safe harbor tests. However, any balance owed and not paid by 4/15 is subject to late payment penalties and interest,
I assumed that I would have been required to make the payment by the 16th of January, 2024 (last date for estimated payments for 2023). I'm glad there is still time. I always make sure to withhold 100% of what I owed in the previous year. However, I am in a jam this year: I have to file late because I am awaiting a k-1 from a family member's estate, and did not withhold at least 90% of what I'll owe for this year.
I went to the link in your reply and read this:
I wonder how they decide what is unreasonable?
Unreasonable is really the "you should have known better" rule. If you get a windfall of $80,000 right at the end of the year and don't pay any extra taxes in then you're going to owe a bunch, right? Because you should have known better.
From everything that you have entered it sounds like your estimates have been very reasonable.