THE EVERETT ADVOCATE – FRiDAy, DECEmbER 8, 2023 Page 23 Estimated Tax Penalties T axpayers are often surprised when the IRS assesses penalties for the underpayment of estimated tax payments throughout the year. Fortunately, taxpayers can take advantage of the estimated tax payment safe harbor. If you meet the IRS safe harbor guidelines, you will not be assessed an underpayment of estimated tax penalty. The IRS will not assess an underpayment penalty if you pay at least 90% of the income tax you owe for the current year ratably throughout the year, or 100% of the income tax you owed for the previous calendar year, also having been paid ratably throughout the year, whichever is less. Furthermore, there is no penalty assessed if the balance due on April 15th is less than $1,000. Keep in mind that if you do not pay the tax owed on your current year’s income tax return in full by April 15th , the IRS will assess interest and “late payment” penalties until such time as the full balance of the tax is paid. The late payment penalty is a separate penalty from the “underpayment of estimated income tax penalty”. Also note that if you earn your income ratably throughout the year as a self-employed individual, for example, you cannot lump all four of your required estimated income tax payments into the fourth and fi nal estimated tax payment, which is due on January 15th of the following year, and avoid the underpayment penalty. Estimated tax payments are due April 15th , June 15th tember 15th and January 15th each year. If, however, your adjusted gross income for the previous calendar year is over $150,000 for joint fi lers and $75,000 for single and married fi ling separate fi lers, then you must pay the lower of 90% of the total income tax for the current year throughout the year, or 110% of the total income tax you owed for the previous calendar year. There are exceptions to the , Sepof underpayment of estimated income tax penalty. You can eliminate or greatly reduce the penalty if you did not receive your income evenly throughout the year. For example, if you operate a seasonable business and the bulk of your income is generated during the last quarter of the calendar year, or if you sold investment property late in the year and realized a sizable capital gain. Another example would be if you withdrew a lump sum from a retirement plan late in the year and you did not have federal and Mass withholdings taken out at the time of withdrawal. IRS Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts should be prepared as part of your tax return to determine if you are indeed subject to the penalty. If you complete Schedule AI, Part One, on page two of this form, you will be able to insert the information necessary to prove to the IRS when during the year you earned the income. In eff ect, you compute your adjusted gross income for the fi rst 3 months of the year and annualize it, the fi rst 5 months of the year and annualize it, the fi rst 8 months of the year and annualize it and then for the entire year to see if you meet the annualized income exception to the penalty. You can also avoid the penalty due to a casualty, disaster or other unusual circumstance which would make it unfair to assess the penalty. You can request a waver of the penalty in these situations by checking off box A of Part II, page one, of Form 2210, and submit documentation supporting your reason for the waiver. Joseph D. Cataldo is an estate planning/elder law attorney, Certifi ed Public Accountant, Certifi ed Financial Planner, AICPA Personal Financial Specialist and holds a masters degree in taxation. REAL ESTATE TRANSAC TIONS Copyrighted material previously published in Banker & Tradesman/The Commercial Record, a weekly trade newspaper. It is reprinted with permission from the publisher, The Warren Group. For a searchable database of real estate transactions and property information visit: www.thewarrengroup.com. BUYER1 BUYER2 Brutus, Desermite Homme, Jaelle A Louis, Elta Mozzaffar, Mojtaba Pierre, Neila Ramos, Julio L Sharon, Arie Genisca, Frantz Petit-Homme, Joel Jiang, Xiaolu Pierre, Michelet SELLER1 Maniscalco, John A Almeida, Walas N 71 Wellington Ave LLC Lamriben, Danil Joseh Jacobs Indenture T Desimone, John R Rdh Tengfei LLC Jacobs, Joseph T SELLER2 Almeida, Amalia R ADDRESS 50 Union St 175 Springvale Ave 71 Wellington Ave #2 5 Timothy Ave 114-116 Hancock St 60 Clinton St 15 Staples Ave #15 Everett Everett Everett Everett Everett Everett Everett CITY DATE 11.17.23 11.21.23 11.22.23 11.13.23 11.20.23 11.15.23 11.21.23 PRICE 800000 562000 600000 1175000 750000 750000 228000
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