Estimated Tax
Submitted by Anonymous on Mon, 2008-08-11 06:24.
Hello Linda: I have an S-corp, I collect a salary each month. I estimated my net income at the end of the year will be around $5000.00. Do I need to withold on my monthly paycheck extra for taxes, so I dont get into underpayment penalty. I am married filing jointly. And how much extra I should take out each month if I am on 23% tax bracket
Thank you
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Taxes on S-Corp Income
Hi,
I really need much more information to figure that out.
But if all you're worried about is avoiding the underpayment penalty and you're ok with paying a bit come April then there's a safe harbor rule that will let you avoid any underpayment penalty.
Make sure all your tax payments and withholding is more than your previous year's tax liability. This is reported on Line 63 of the 2007 Form 1040. Make sure the year end federal tax withholding is at least that amount. If you wife works, be sure to include her withholdings in your calculation.
Most states have a similar safe harbor rule, so do the same for your state income tax withholding.
L:)
PS If your AGI is $150K or more you must pay 110% of last year's tax liability to avoid any underpayment penalty.)