Penalty for Underpayment of Estimated Tax

A taxpayer generally will be subject to this penalty if the tax is $1,000 or more and the taxpayer did not prepay on a timely basis at least the smaller of (1) 90% of the current year tax, or (2) 100% of the prior year tax (110% if the prior year AGI was over $150,000 ($75,000 if married and filing a separate return)).

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If the other payments on that subsequent year's return do not satisfy the required estimated tax payments, the taxpayer will be subject to the penalty for underpayment of estimated tax.

Get the most out of overpayments applied to the following year's return

The penalty for underpayment of estimated tax may be waived, under Sec.

Bankruptcy court cannot partially disallow penalties

Congress intends that the penalty will not apply when the penalty for underpayment of estimated taxes applies.|74~

Current tax laws increase compliance concerns

Exhibit: Sample unprotected estimated tax payment notice Important Notice To: Client From: Partner Date: m/d/y Re: Unprotected estimated tax payments Please note that the combination of your projected withholding and/or estimated tax payments for 200X is not the required amount to "protect" you from penalty for underpayment of estimated taxes. We based the estimated payments on information you provided to us about your expected 200X tax situation.