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Underpayment penalty on taxes......Paging Poodle...please see last post
Posted on 4/2/13 at 1:00 pm
Posted on 4/2/13 at 1:00 pm
I got back our income tax report this morning from the accountant and to say I was floored is an understatement. For openers, we had twin girls this year, so I figured our liability would be waaaaay down. Not the case, we actually owe more this year than last.
First question, while on maternity leave, my wife received short term disability, which the accountant report stated that it was not subject to withholding (which I'm assuming means in lay terms, no taxes were taken from it, so that amount is owed in lump fashion come April 15)?
Second question, he also noted that we incurred a underpayment penalty for not having enough withheld or paid via estimates. Is this due to the short term disability? Is this a mechanism in place to keep people from claiming 0, taking their entire paycheck up front, and then owing the entire tax bill on April 15?
First question, while on maternity leave, my wife received short term disability, which the accountant report stated that it was not subject to withholding (which I'm assuming means in lay terms, no taxes were taken from it, so that amount is owed in lump fashion come April 15)?
Second question, he also noted that we incurred a underpayment penalty for not having enough withheld or paid via estimates. Is this due to the short term disability? Is this a mechanism in place to keep people from claiming 0, taking their entire paycheck up front, and then owing the entire tax bill on April 15?
This post was edited on 4/2/13 at 4:37 pm
5
Posted on 4/2/13 at 1:03 pm to TJG210
Not sure about question 1, but I also got an underpayment penalty of $11.
Thanks, Obama
Thanks, Obama
Posted on 4/2/13 at 1:11 pm to TJG210
Without knowing your AGI any attempt to explain why your taxes increased would be nothing more than speculation, or educated guesses. Also, how many children do you have with the addition of the twins? (Congratulations to you and the wife.)
Posted on 4/2/13 at 1:16 pm to Poodlebrain
I got hit with underpaymet penalty this year. First time ever. 
I wonder if the IRS will pay a penalty to people when it is late with their refunds.
I wonder if the IRS will pay a penalty to people when it is late with their refunds.
This post was edited on 4/2/13 at 1:19 pm
Posted on 4/2/13 at 1:21 pm to Poodlebrain
quote:
Also, how many children do you have with the addition of the twins? (Congratulations to you and the wife.)
Thanks......those two are our first.
Now that I've calmed down a bit over it, I think the short term disability is the main culprit in the exhorbinant increase. I thought by going with an accountant that he would catch deductions we were missing out on by using turbotax.....Is there anything else associated with the babies we could possibly write off? We employ a full time (40hrs/week) nanny and pay employment taxes on her as well.
What is the deal with the underpayment penalty?
This post was edited on 4/2/13 at 1:22 pm
Posted on 4/2/13 at 2:05 pm to MaesterMullen
quote:
I also got an underpayment penalty of $11.
The tax man charged me $10
Posted on 4/2/13 at 2:37 pm to RickAstley
Mine was $46, but WTF is this?
Posted on 4/2/13 at 2:37 pm to TJG210
That's one of those flat out infuriating things to me. it's my money until I pay what's due, or that's how it should be anyway.
I just see how it's justified. Why are taxes not just flat out due on April 15? Or why not give a discount for prepayment? If I pay 6 months of premiums at once I get a pretty good discount.
it's my money until I pay what's due, or that's how it should be anyway. I just see how it's justified. Why are taxes not just flat out due on April 15? Or why not give a discount for prepayment? If I pay 6 months of premiums at once I get a pretty good discount.
Posted on 4/2/13 at 3:04 pm to TJG210
quote:
Is this a mechanism in place to keep people from claiming 0, taking their entire paycheck up front, and then owing the entire tax bill on April 15?
By claiming 0 do you mean claiming zero dependents? If you do then you stated the opposite of what will happen. At 0 dependents they are going to take the maximum withholdings allowed out of your paycheck.
Posted on 4/2/13 at 3:41 pm to VABuckeye
quote:
By claiming 0 do you mean claiming zero dependents? If you do then you stated the opposite of what will happen. At 0 dependents they are going to take the maximum withholdings allowed out of your paycheck.
Isn't there some way for you to have no taxes taken out when you receive your paycheck? I'm not 100% sure about this, but I could swear I've heard people suggest that this was possible, and they wanted to do it to spite the government.
Posted on 4/2/13 at 3:56 pm to TJG210
I can't answer your questions because I don't know enough of the details about your return but I'm curious why you didn't address your questions to the accountant who prepared your return?
Or, maybe you did and he couldn't answer them. If so, it's time for another accountant.....
Or, maybe you did and he couldn't answer them. If so, it's time for another accountant.....
Posted on 4/2/13 at 4:07 pm to TJG210
I believe you can always set up a scheduled payment plan and pay your taxes based on what you think you will owe for this year, in say quarterly payments. That wouldn't require you to withhold an amount every pay period. Someone can correct me if I am wrong.
Posted on 4/2/13 at 4:08 pm to TJG210
quote:
but WTF is this?
It is the bent over feeling you get after tax season
Posted on 4/2/13 at 4:26 pm to LSURussian
quote:
I'm curious why you didn't address your questions to the accountant who prepared your return?
I did end up e-mailing him back after I had time to cool down from the initial shock, but wanted to get some opinions on here first before I made a fool of myself questioning him.
Update, my wife called up the insurance company and they claim the short term disability is not taxable income, and my wife is now waiting for her employer to confirm. I'm really not sure how this works, and it really baffles me that if this was the case why the damn accountant didn't realize this in the first place. (I'm not dealing with a rinky dink outfit with someone dressed up as the statue of liberty either, so I expect better)
Further update, they didn't provide us a 1099 or W-2 and claim the income isn't taxable.
This post was edited on 4/2/13 at 4:38 pm
Posted on 4/2/13 at 4:34 pm to TJG210
You can claim exempt from taxes if you will have no tax liability. Any one could do it years ago. Now you have to be able to prove that you will have no liability.
Our employees still try
I regularly pay the underpayment fee. My wife and I both withhold at higher rates and take out extra. Apparently i just need to give them my whole check and hope for some back at the end of the year.
Our employees still try
I regularly pay the underpayment fee. My wife and I both withhold at higher rates and take out extra. Apparently i just need to give them my whole check and hope for some back at the end of the year.
Posted on 4/2/13 at 4:47 pm to TJG210
quote:
they claim the short term disability is not taxable income
Unless something has changed recently, short term disability is definitely taxable unless you paid the premiums. If your employer is paying for all of the premiums and the premiums aren't included as part of your gross wages, then the benefits received are taxable.
Posted on 4/2/13 at 4:53 pm to TJG210
Short term disability benefits are NOT taxable income. Unless the benefits exceeded more than the 66.7% of gross pay maximum. If your accountant doesn't know this, then I'd fire his arse, and see if you can get a new return before the 15th. If you can't, file the return and pay something on time, then file an amended return asap with a new accountant.
Posted on 4/2/13 at 5:03 pm to PurpleAndGold86
Here are some blurbs from articles if you are interested:
Every article I have seen says the exact same thing.
quote:From Sovereign Bank
Will Your Disability Benefits Be Taxable?
Both short- and long-term disability benefits are taxable to varying degrees, depending on the type of policy. Here are the rules under current law:
Your short-term disability benefits are taxable or tax-free depending upon how the plan premiums are paid. States with statutory short-term disability plans have special rules.
The portion of LTD benefits you receive that is paid by an employer is taxable to you. Federal, state, and local taxes are withheld; Social Security and unemployment taxes are excluded.
The portion of LTD benefits you receive that is paid by you is tax-free, except if you pay with pre-tax dollars.
quote:From Turbotax
However, short-term disability payments received under an insurance policy are not exempt, though you may not be liable for additional taxes on such payments if you have already borne the cost of taxation through the structure of the plan.
quote:From Bankrate
Disability income is taxable when your employer has paid the premiums and the premiums have been excluded from your earnings. As a general rule, an employer generally excludes disability premiums from an employee's earnings.
Every article I have seen says the exact same thing.
Posted on 4/2/13 at 5:10 pm to PurpleAndGold86
All underpayment penatlies are based on the previous years tax liability. You have to have 110% of last years liability paid in the current year through either withholdings or estimates.
So the disability payment has no berring on your underpayment. More likely you changed your withholding to pay in less, that you thought would be compensated by the addtion of the girls, congrat by the way, but the disability payment raised you AGI to cancel out the extra dependents.
So the disability payment has no berring on your underpayment. More likely you changed your withholding to pay in less, that you thought would be compensated by the addtion of the girls, congrat by the way, but the disability payment raised you AGI to cancel out the extra dependents.
Posted on 4/2/13 at 5:21 pm to LSUMon
quote:
You have to have 110% of last years liability paid in the current year through either withholdings or estimates.
This is incorrect. If you pay 100% of the tax liability from prior year, you will avoid any penalities associated with underpayment of taxes.
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