Your client paid his entire tax bill by January 15th, so why does his return still show an underpayment penalty? Jeremy explains why the estimated tax penalty works as a timing rule that tests each installment separately, and he walks through the safe harbors, Form 2210, and why withholding gets better treatment than estimated payments. He also covers ways to shrink the penalty, like annualizing uneven income or running more S corporation wages through withholding, and why getting it waived is nearly impossible.
Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com
Subscribe on YouTube
https://www.youtube.com/@TaxinAction
Earn CPE for Listening to This Podcast
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This podcast is a production of Earmark Media
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Thomson Reuters - http://taxshow.promo/taxautomation
- (00:00) - Why Sam Owes Penalty
- (03:19) - Pay As You Go Basics
- (05:45) - Installment Dates Explained
- (07:40) - Who Must Pay Estimates
- (10:01) - Safe Harbor Rules
- (15:02) - Special Filing Status Cases
- (17:27) - Sam’s Installment Breakdown
- (19:12) - States Have Different Rules
- (22:02) - How Penalty Accrues
- (28:52) - Form 2210 Overview
- (32:36) - Sam’s Penalty Math
- (36:21) - Withholding Versus Estimates
- (38:08) - Using Payroll To Fix It
- (41:54) - Overpayments Timing Trap
- (44:40) - Annualized Income Method
- (49:56) - Waivers And Relief Limits
- (51:45) - Projections And Takeaways
- (56:57) - Wrap Up And Next Episode
Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com
Subscribe on YouTube
https://www.youtube.com/@TaxinAction
Earn CPE for Listening to This Podcast
https://www.earmark.app/
This podcast is a production of Earmark Media