EPL Tax Group, LLC

Frequently Asked Q & A

General Questions:                                                                                                                                                                    

If you have a general question of a generic nature send an e-mail to GeneralQ@BusinessAndTaxPlanning.con

Q. I am going to receive a large sum of unexpected income. Should I increase my estimated tax payments or have additional taxes withheld from my pay check?

A. If your Adjusted Gross Income, AGI, (look at line #37 on your Form 1040) is greater than $150K for married / $75K for singles; and if you have your taxes withheld by your employer or a W-2, and your withholdings will be greater than last years total tax liability (look at line #63) then you don't need to pay anything additional now.  Just be prepared to pay, next April 15th, 10%-39% depending on the tax percentage of your windfall.
If you are self employed or for other reasons make quarterly estimated tax payments, then make sure that all of your 1040-ES payments are paid timely and for the correct amount, ie: 1/4 of last years tax liability (line #63).  This is called a "protective estimate"  or th have paid in 100% of last years taxes.

If your AGI is greater that $150K/$75K, then are under a different set of rules.  We need to talk!  Briefly, you should have 120%  paid in of last years taxes.  It doesn't make sense to me either.  Go figure.