Estimated taxes, will safe harbor apply in my situation?

Discussion in 'Taxes and Accounting' started by Steven W, Feb 14, 2019.

  1. Steven W

    Steven W

    I made 10k in 2017. My liability was like 1k. In 2018 I made a lot more and paid 4k in tax through my employer for work. However, my tax liability this year will probably be around 30k. From January-Sept I broke even with no profit. All my profit came from Sept- Dec, not sure if this makes a difference for estimated taxes.

    Since I paid more than 100% of tax needed for 2017, will I be fine?
     
  2. sprstpd

    sprstpd

    I am not a tax professional.

    If I am reading this correctly, it appears that you paid more than 110% in estimated taxes in 2018 compared to your 2017 tax liability. This should mean you qualify for safe harbor.

    If your income is lumpy throughout the year, you can use the annualization method to potentially reduce your penalty. But in your case it appears you don't need to do this.

    You should consult a tax professional, or read the IRS instructions on safe harbor and convince yourself that you qualify.
     
  3. Sig

    Sig

    I agree, you clearly meet the safe harbor. I've pretty much depended on this every year for the past 10 years.