FILING INFORMATION/TAX WITHOLDING AND ESTIMATED TAX

Because there was no previous tax liability from the prior year

, it is not required to make estimated payments.

To avoid penalty, combined payments must be at least 100% (110% if AGI more than $150,000) of prior year liability.

Because Michael's current year liability of $8,000 is double his prior year liability, you use $4,000 as his prior year amount.

Certain taxpayers may request a waiver from the penalty. A taxpayer requesting a complete waiver can elect to have the IRS calculate the penalty, while a taxpayer requesting a partial waiver must calculate the penalty on Form 2210. The taxpayer must attach Form 2210 and a statement to their tax return explaining the reasons for not meeting the estimated tax requirements and the period for the waiver request.

If your withholdings are greater than your tax liability, no estimated tax payments are necessary.

VFor estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date.

Jan. 1 - March 31 April 15 April 1 - May 31 June 15 June 1 - August 31 Sept. 15 Sept. 1- Dec. 31 January 15 next year

To avoid penalty they must pay the smaller of 90% of the tax due or 100% of tax on last year's return (110% if AGI over $150,000). 90% of $43,960 is $39,564.

Subtract their withholding of $36,960 to arrive at the required estimated tax payments of $2,604

If you receive salaries and wages in addition to other income, you may be able to avoid having to make estimated tax payments on your other income by asking your employer to take more tax out of your earnings.

To do this, file a new Form W-4, Employee's Withholding Allowance Certificate, with your employer

Estimated tax liability exists when both the following conditions exist:

• Individuals will owe at least $1,000 in tax after subtracting withholding and credits • Withholding and credits will be LESS than the smaller of one of the following: 1. 90% of the tax to be shown on this year's tax return 2. 100% of the tax shown on last year's return (110% if AGI is more than $150,000)

Estimated tax liability exists when:

• Individuals will owe at least $1,000 in tax after subtracting withholding and credits.

Aaron was expecting a refund from his tax return; however, the IRS still issued a penalty because there was not a sufficient amount of tax paid by the due date. The period was between June 1 - August 31. When was Aaron's payment due?

• September 15

When Stephen fills out his W-4, he decides to take out the minimum taxes in order to receive more take-home pay in his paychecks. When his return is complete, he asks you why he owes taxes. What is the simplest explanation for this?

• Taxpayers must pay an amount due when the total tax is greater than their total tax payments