Nancy Young wrote:
"Dan Abel" wrote

"Cindi - HappyMamatoThree" wrote:

stimulus checks are paying off last year's taxes. This year we are
paying estimated taxes to avoid having a balance at the end of the
year. The last two years we have been stuck so hopefully this year
will be very different.
Unless you are in a penalty situation, you're better off "paying
yourself" by putting what you would have paid as estimated taxes into a
specially designated money market account.
I need to bring that up with DH. He was intent about paying it off. We
don't
have any penalty situation so yours is a good option.
But it appears that simply underwithholding (or not paying estimated
taxes) automatically puts you in a penalty situation. We just got
dinged by the state, and the penalty is more than any interest we could
have earned. We both filed and paid in full, on time. And we had to
pay interest, too.

I wondered about that myself. I thought you were in for penalties and
interest if you didn't pay some 90% of what you owed.

nancy


They do enforce and penalize tax underpayment heavily. They changed the
safe harbor rules a couple years ago. Now you need to pay in at least
100% of the prior years taxes (and 110% past a certain income) to avoid
a penalty. It also has to be done on time and a proportional amount each
quarter.