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Re: estimated taxes

Hi. That's great that your income went up this year (even though I'm sure you worked quite hard to earn that extra money.)

For starters, I would recommend that you pay enough for your fourth quarter estimate to stop any underpayment penalties from accruing as of 1/15/16. You would want your total federal tax payments to exceed the lesser of 110% of your prior year's tax liability or 90% of your current year's tax liability.

If you didn't earn your income evenly over the year, you can reduce or eliminate the penalty by "annualizing your income" on page 3 of the Form 2210 (https://www.irs.gov/pub/irs-pdf/f2210.pdf). Essentially, you show how much you earned each quarter, so if the increase came after 8/31, you might be in good shape. (Believe it or not, the "quarters" actually end on 3/31, 5/31, 8/31, and 12/31.)

Lastly, if you get hit with an underpayment penalty, please note that the calculation is based on the current low interest rates. So people owe about $200 on every $10k tax shortfall. In the grand scheme of things, that is not a huge penalty.

Hope this helps you out.

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