wildbill@ucbvax.ARPA (William J. Laubenheimer) (10/26/84)
> Near as I can tell, the IRS doesn't much care how many exemptions you claim > so long as at least of 80% of the tax owed is witheld or paid as estimated > taxes. If you pay less, you get to fill out bright pink form 2210, which > has four extremely complicated ways to figure out if you owe a penalty for > not making timely payments. > John Levine, ima!johnl This is what they tell you, but unfortunately, it doesn't seem to be their actual policy. I had loads of fun with this in 1983. In the instructions to the form 1040ES (1983), their instructions were to assume 10% withholding on dividend and interest income. Since this would cover my estimated tax liability for 1983, I did not make an estimated tax payment, even though (at the time) it seemed pretty clear that Congress would overturn the withholding measure. Comes early August, and Congress does in fact overturn the dividend and interest withholding measure. So, to be a good little taxpayer, I send in half my estimated liability on 15 September. Then, in the fourth quarter, I make about twice as much consulting income as I had planned on. I make a good rough estimate and send in about twice what I had sent in in September on 15 January, file my taxes in April (winding up with a refund due), and forget about it. The IRS looks at my return and objects to my payment pattern. They charge me $15 penalties and interest, "...or fill out this 2210 and show us why your payments were adequate". Since my payments were ahead of actual taxes owed throughout the year, I don't raise a stink, send in the form, and get my $15 back. Nonetheless, despite having paid more than my actual liability throughout the year, they still wanted to know that I was actually doing this. Bill Laubenheimer ----------------------------------------UC-Berkeley Computer Science ...Killjoy went that-a-way---> ucbvax!wildbill