Great video, but one point is still not clear. One of the ways to completely avoid a penalty is to "Prepay 100% of your prior year tax liability,* ..." In the example, there is only W/H. I am retired and only pay 50% of the tax via W/H. The rest via Estimated Tax Payments. Even if i exceed last year's tax liability, TurboTax defaults a penalty. When i look at Form 2210, there is no test that considers (W/H + Est Tax Pay) Vs. the prior year. Can you clarify?
Unfortunately, I don't know much about TurboTax, but I do know how my professional software works. I know Turbo carries forward figures from year-to-year if you use it every year, but I don't know if Turbo carries ALL the figures. When I've examined TT returns, there does seem to be a carry forward page, but again, I don't really know what's on it. That being said, there should be at some point in the software a place where you can enter your prior year's tax liability. Also, one additional thought is that if you didn't make the same estimated payment each quarter, or skipped a quarter, the system might be calculating a penalty based on that fact. I really wish I could have show the 2210 does with uneven payments, but that's a concept that's well beyond the realm of "oversimplification."
@@TheTaxGeek Thanks for reply. You don't need to pursue this for my sake. The penalty is trivial and i'll just pursue a waiver. But, it chaps my ass that the IRS explictly says, "In general, you may owe the penalty for 2024 if the total of your withholding and timely estimated tax payments didn't equal at least the smaller of: 1. 90% of your 2024 tax, or 2. 100% of your 2023 tax. " I want to see a simple test in the form. As an Engr, raised in a legal family, i appreciate that they don't explicitly say if you meet one (1) of those tests, there is no penalty. But common sense cries, "What the Hell!" Even within Form 2210, they don't consistently use the proper terms. Sometimes it's "taxes paid", when it's really "Only Withholding". Thanks your help. PS - Don't tell anyone or they'll kick me out of Engineering. But, i love accounting! Reconciling bank and credit cards, doing taxes, etc. Fun stuff.
This shows how much trouble this country is in when you have to pay taxes before you get the actual income. "Estimates" stink. Does anyone even know how much money the IRS collects each year from interest and penalities because most people can't figure out how much they owe in estimates?
Love you over simplified videos - Tax Geek . Hats off !
Thanks!
Great video, but one point is still not clear. One of the ways to completely avoid a penalty is to "Prepay 100% of your prior year tax liability,* ..." In the example, there is only W/H. I am retired and only pay 50% of the tax via W/H. The rest via Estimated Tax Payments. Even if i exceed last year's tax liability, TurboTax defaults a penalty. When i look at Form 2210, there is no test that considers (W/H + Est Tax Pay) Vs. the prior year. Can you clarify?
Unfortunately, I don't know much about TurboTax, but I do know how my professional software works. I know Turbo carries forward figures from year-to-year if you use it every year, but I don't know if Turbo carries ALL the figures. When I've examined TT returns, there does seem to be a carry forward page, but again, I don't really know what's on it. That being said, there should be at some point in the software a place where you can enter your prior year's tax liability.
Also, one additional thought is that if you didn't make the same estimated payment each quarter, or skipped a quarter, the system might be calculating a penalty based on that fact. I really wish I could have show the 2210 does with uneven payments, but that's a concept that's well beyond the realm of "oversimplification."
@@TheTaxGeek Thanks for reply. You don't need to pursue this for my sake. The penalty is trivial and i'll just pursue a waiver. But, it chaps my ass that the IRS explictly says, "In general, you may owe the penalty for 2024 if the total of your withholding and timely estimated tax payments didn't equal at least the smaller of:
1. 90% of your 2024 tax, or
2. 100% of your 2023 tax. "
I want to see a simple test in the form. As an Engr, raised in a legal family, i appreciate that they don't explicitly say if you meet one (1) of those tests, there is no penalty. But common sense cries, "What the Hell!" Even within Form 2210, they don't consistently use the proper terms. Sometimes it's "taxes paid", when it's really "Only Withholding". Thanks your help. PS - Don't tell anyone or they'll kick me out of Engineering. But, i love accounting! Reconciling bank and credit cards, doing taxes, etc. Fun stuff.
Hi have another suggestion 😊 529 plan!
Good suggestion. Added it to the list. Look for it soon!
❤
This shows how much trouble this country is in when you have to pay taxes before you get the actual income. "Estimates" stink. Does anyone even know how much money the IRS collects each year from interest and penalities because most people can't figure out how much they owe in estimates?
Certainly not me. But what I really find astonishing is the insane number of calculations it takes to arrive at the penalty.