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Exceptions to Estimated Tax Penalty

Generally, you do not have to pay a penalty if either of the following conditions applies:

Less than $1,000 due

You do not owe the IRS a penalty if the total tax shown on your tax return minus the amount your paid through withholding (including excess social security tax withholding) is less than $1,000. For 2007, your total tax is the amount on line 63 "Total Tax" of the form 1040 reduced by various amounts which may include:

  1. Any recapture of a federal mortgage subsidy included in line 63
  2. Any social security or Medicare tax on tips not reported to your employer on line 59.
  3. Any tax on qualified plans, etc. on line 60
  4. Any uncollected social security, Medicare or railroad retirement tax included on line 63
  5. Any earned income credit from line 66a
  6. Any additional child tax credit on line 68
  7. Any credit for federal tax on fuels on line 70
 
No tax liability last year

You do not owe a penalty if you had no tax liability in the prior tax year and you were a US citizen or resident for the whole year. For this rule to apply, your tax year must have included all 12 months of the year. You had no tax liability in the prior tax year if your total tax was zero or you were not required to file an income tax return.

Exceptions to Estimated Tax Penalty


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