Underpayment penalty on taxes......Paging Poodle...please see last post | Page 2 | TigerDroppings.com

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Vols&Shaft83
Georgia Tech Fan
Member since Dec 2012
18550 posts

re: Underpayment penalty on taxes......Paging Poodle...please see last post


quote:

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.




"WRONG WRONG WRONG WRONG WRONG WRONG, WRONG WRONG WRONG WRONG WRONGGGGGGGG, YOU'RE WRONGGGGGG, YOU'RE WRONGGGGGG, YOU'RE WRONGGGGGGGGGGGGGGGGGGGGGGG"

From IRS.gov:

quote:

taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.


LIZZZINK







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Vols&Shaft83
Georgia Tech Fan
Member since Dec 2012
18550 posts

re: Underpayment penalty on taxes......Paging Poodle...please see last post


quote:

PurpleAndGold86


you gave a lot of quotes, but I feel the need to simplify the information for the OP (I do this for a living, not trying to be a dick )


Whether benefits are taxable depends upon how the insurance premium was paid:

1.)Employer Funded - proportional taxation-Short term disability income is taxable if your employer shares in the cost of your disability premium. Many group disability programs operate in this manner, and many employers elect to provide disability insurance as a paid company entitlement. Make sure you understand if your employer is paying a portion of your premium.

Your disability income will be taxable proportionately to the premium paid by your employer, and the portion paid by you using after tax payroll deductions.


2.)Before Tax - premiums paid by employee, with pre-tax income.generates savings on the premium However, the benefits are 100% taxable. Which is why an honest insurance agent won't include short term disability policy in electable pre-tax deductions.



3.)After Tax - ideal for pregnancy and maternity leave premiums payed by employee with after tax money, benefits are 100% tax free

4.) Combined Funding - common with some state disability programsAre state short term disability claims payments taxable? Only five states have a disability program in place and the answer differs for each state as the manner in which premiums are paid differ.

Yes, it's a long answer. But to simplify it, if your wife paid the premiums with after tax money, the benefits aren't taxable. If she paid with pre-tax money, they are taxable. If the employer paid 100% of the premium, they are generally taxable. If you shared the premium costs, they are proportionally taxable.








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PurpleAndGold86
LSU Fan
Houston, TX
Member since Jun 2012
10786 posts

re: Underpayment penalty on taxes......Paging Poodle...please see last post


If you do this for a living, I would probably go back and edit your prior post claiming that short term disability benefits are not taxable because it is incorrect information especially the 66% info you gave. The determining factor in whether or not the benefits are taxable is how the premiums were paid.





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Vols&Shaft83
Georgia Tech Fan
Member since Dec 2012
18550 posts

re: Underpayment penalty on taxes......Paging Poodle...please see last post


quote:

If you do this for a living, I would probably go back and edit your prior post claiming that short term disability benefits are not taxable because it is incorrect information especially the 66% info you gave. The determining factor in whether or not the benefits are taxable is how the premiums were paid.



I'll submit that I should have clarified which ones are taxable and which ones aren't. I assumed, perhaps incorrectly, that the premiums weren't paid by the employer because the OP Mentioned his wife called the insurance company, which is common for post tax electable insurance policies. But I could have been wrong.

The 66% info I gave is correct, Disability Insurance protects your income, you cannot protect 100% of gross income because you don't take home 100% of gross income.. There's a federal guideline for "ALL" Disability Insurance. You can only protect 66.6% - two thirds of your income. ie: If you make $3000 a month you can only protect $2000.

If somebody receives more than 2/3 of gross income, additional benefit above the limit paid by the short term disability policy is subject to income tax and Hefty penalties.

Any additional benefits cannot come from the disability policy, it must come from another source such as indemnity insurance, employer paid sick/annual leave.






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