Avoiding tax underpayment
Am I correct that no matter how much tax I owe this year, as long as I've had withheld at least 110% of tax owed prior year, I cannot be penalized for tax underpayment?
No one has been working at the IRS for the past 3 weeks. Party time 💃🕺🏼🎉
Sheeeeeit
No! Companies are only allowed to withhold 25% of stock sale revenue regardless of your tax bracket. That means if you sold $10k in stock and are in the 30% tax bracket, you will be on the hook for $500 extra dollars unless you do estimated tax payments ($10k * (30% - 25%)).
22% after the Trump tax "cut"
OP didn’t reference a stock sale. Clearly they derive revenue from a side gig.
Correct
That’s how I understand it. Note that withheld does not include any expected payments you may have made. Also, avoiding the penalty is not the same as avoiding the tax. You’ll still owe the tax but don’t have to pay the “interest” penalty on it. But I think you already knew that based on your question.
Don’t take tax advice from Blind.