The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: secondcor521 on December 28, 2012, 05:34:03 PM
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Hi all.
My oldest child is hopefully going off to college next fall, so in preparation for the FAFSA I filled out a preliminary estimated tax return.
I thought I was on track with my withholding, but I apparently was not because of higher income and the fact that my oldest no longer qualifies for the child tax credit, and because I took some unplanned capital gains this month due to the fiscal cliff stuff.
I think I may be on the hook for a tax penalty because I don't meet the safe harbor provisions. My underpayment is more than $1,000. I did not pay 90% of my current year tax liability. I also did not pay more than 100% of my last year tax liability.
Does anyone know of any method to (legally, of course) avoid the penalty now? My last paycheck has already been processed, so I can't up my withholding. Can I send in an estimated tax payment and make it count for 2012 somehow? Other ideas?
2Cor521
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Don't know what the situation is when you're a salaried employee, but as self-employed I file estimated tax (Form 1040-ES). You've got until January 15th to make an estimated tax payment for this year. I would think (totally unprofessional opinion, though) that if the capital gains are at all significant, then filing estimated tax would actually be the correct thing to do.
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It looks like you guys are right.
I can apparently make an estimated tax payment before January 15th and put it down on my taxes and it looks like I will avoid the penalty.
Thanks all!
2Cor521