safe harbor

[KeshaH]

We'd be happy to help answer your safe harbor questions. Can you please provide more information on what you need assistance with? Once we know what specific questions you have around safe harbor we will be able to better assist you.

[bappreciated]

I.  If  you have several unforeseen capital gains in 2025 and pay tax quarterly and income is over $150,000.

2.  The stock is held by a family LLC and you have a third ownership

3.  If you pay 110% in 2025 of your 2024 taxes are you meeting SAFE HARBOR requirements to insure no IRS           penalty for late payment?

Safe Harbor indicates pay 90% of 2025 tax or 110% of 2024 year tax, whichever smaller.  2024 smaller than 2025.  This is how one would interpret it as written.

Spoiler

[DaveF1006]

Yes. It looks your interpretation of the IRS Safe Harbor rules for estimated tax payments is correct.  Here's how it works:

1. Safe Harbor Requirements: To avoid an underpayment penalty, you must meet one of the following conditions:

• Pay at least 90% of the tax owed for the current year (2025), 
• or pay 110% of the tax owed for the previous year (2024) if your adjusted gross income (AGI) exceeds $150,000.

Application to Your Situation: Since your 2025 income is higher than 2024, paying 110% of your 2024 taxes should satisfy the Safe Harbor rule, even if it doesn't cover 90% of your 2025 tax liability. This ensures you won't face penalties for underpayment, as long as the payments are made on time.

Quarterly Payments: Make sure your quarterly estimated payments are timely and based on the Safe Harbor amount (110% of 2024 taxes). If your income fluctuates significantly during the year, you might consider using the annualized income installment method (Form 2210, Schedule AI) to adjust payments based on actual income received.