The post immediately before your own post lays out exactly such a scenario. Here's a link: viewtopic.php?p=8212822#p8212822OK, I’ll bite.It's easy to contrive a situation in which withholding early in the year avoids an underpayment penalty, but the same amount of withholding later in the year does not.
Can you please lay out such a situation? I can’t think of one. (But then again, I’m not a tax expert).
If you're paying your required annual payment entirely through withholding, you will not encounter this. In fact that's how you reach a safe harbor. I realize that you, Stinky, have particular expertise in avoiding estimated tax payments, so maybe that's why this is not on your radar. But anyone making estimated payments should be aware of this.
If a large portion of your income comes late in the year, it may be advantageous to make an estimated payment late in the year to satisfy the required quarterly installment (that's line 10 of Form 2210). (Not everyone can cover all required payments using withholding like you strive to.) Once you're in that situation, your four quarterly "withholding plus estimated payment" totals -- line 11 of Form 2210 -- are sensitive to the date on which the withholding is made. You're free to count the withholding as being paid in four equal parts, but if more than 1/4 of the withholding was actually paid in Q1, you can use that fact to increase the Q1 amount on line 11. It should be clear that this could be the difference between having or not having an underpayment in Q1. That is, Q2 withholding of a certain amount might lead to a penalty, while withholding that exact same amount in Q1 instead would not. In this situation, it is misleading to state that "withholding is always timely".
Statistics: Posted by ssel — Sat Jan 18, 2025 7:22 pm — Replies 109 — Views 12261