Penalty on underpayment?


T

Taxlover

Lets take a worst case scenerio. I have ordinary income on January 1st that
would result in a $100,000 tax bill, before penalties. I pay no estimated
taxes and have no withholding.
What will my penalty be? Approximately; I mean, $500, $5,000, $50,000?
(If you know the penalty for NYS also that would be great.)
 
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E

ed

Lets take a worst case scenerio.  I have ordinary income on January 1st that
would result in a $100,000 tax bill, before penalties.  I pay no estimated
taxes and have no withholding.
What will my penalty be?  Approximately; I mean, $500, $5,000, $50,000?
(If you know the penalty for NYS also that would be great.)

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$4,551.30 using 2007 rates (8% all year).. So far in 2008 the penlty
would be$3,982.39 at 7%. This assumes your tax liabiity for last year
was at least as much and you didn't pay your 2008 taxes until April 5,
2009. Sorry ot enough information to do NY.

ed
 
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T

Taxlover

ed said:
$4,551.30 using 2007 rates (8% all year).. So far in 2008 the penlty
would be$3,982.39 at 7%. This assumes your tax liabiity for last year
was at least as much and you didn't pay your 2008 taxes until April 5,
2009. Sorry ot enough information to do NY.
Well, that's not so bad, thanks. Heck, if you figure the market is going to
recover this year then I am better off paying the penalty and holding onto
the money. (but on the other hand, I could lose money in the market AND pay
the penalty...)

Yes, assume my 2007 income was much larger so there is no safe harbor.
 

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