Discussion: OMG

Don't forget to bury the offshore earnings (like GE). What's your fee these days, 5%?

Is he willing to donate to OUSA ?

In this case, a vicarious PR is the way to go.

I believe the appropriate phrase is, Better him than me.

And another pretty good one today, though not in the same league, this one owes about 23K. But he also knew it was coming, has 40K put aside and is quite happy with the bottom line.

In both cases my work is mostly around the edges, see if you can improve the bottom line by a thousand or two. But it's hard to get a guy a refund when he walks in with, in one case, just about a million in income, nothing taken out for taxes, or in the other case, about 75K of self employment income, again nothing taken out for taxes. The main thing is what their expectations are. And neither of these two were really distraught.

On reconsideration, maybe I should be wishing it was me owing the 300K. Because I'd also have the income....

Aren't there penalties for not having had withheld at least 90% of the previous year's taxes paid ?

I know some folks like owing b/c they've had the use of the money longer.

Very risky to play that game, especially with money only earning 0.25%. And if you make a mistake and underpay by more than 10% of the prior year's taxes, you'll regret it.

Because you'll be required to complete the onerous 4-page Form 2210 - "Underpayment of Estimated Tax." Form 2210 is required whenever you fail to make estimated payments well in advance of April 15 as levitin says.

On Form 2210 you essentially are required to break down your 1040 income and deduction amounts for each of the four quarters of the year. And then you calculate EACH quarter's underpayment, interest and penalty, and add them up. Yes penalties are cumulative.

Because of this, I always overpay the first quarter of next year's taxes, by sending in a large estimated payment on the preceding April 15...to heck with using the "float."

Even if he owed 300K, he could well have prepaid 100% of the previous year's taxes. If I earn a million in 2011, I will definitely have paid as much in estimated taxes as my 2010 tax liability, and will owe a whole lot next April. (I think there are some ways you can still get hit with penalties in a situation like that, even if you have done the estimated payments based on the tax from the year before.)

Well, Clark, relax. You don't have to calculate the penalty, if a penalty is actually due (there are exceptions), just let the IRS do it. You don't have to do the 4-page version of 2210 (you only do that if you are subject to penalty and your income is uneven throughout the year in a way that could reduce the penalty). If you want to both scare yourself and do a lot of extra work, all without computers if I recall correctly, that's fine. But no need to scare others.

JJ, on the other hand, has it mostly right. And my guy, despite owing 300K+, is not subject to any penalties as long as he files and pays on time.

Do millionaires still pay taxes? I thought the ruthless Republicans had made that illegal, as being overtly unpatriotic because of the way it leads to excessive funding of the government and the varied scourges of socialism.

If he made a million bucks and paid 300K in taxes, then it's possible that he's not a millionaire (even if he didn't spend anything).