I won some money on a game show in August. I received a check later that year that did not have federal taxes taken out. Now I owe several thousand of that money back to the government. Do I have to pay a tax penalty for not sending it in sooner?
2007-04-01 14:10:07 · 8 answers · asked by Lauren M 3 in Business & Finance ➔ Taxes ➔ United States
If it was August 2006, and you haven't filed your return for 2006 yet, then you should just owe the tax, not any penalty.
2007-04-01 14:14:40 · answer #1 · answered by Anonymous · 1⤊ 2⤋
Maybe. You can be assesed a penalty for underpayment of taxes. However the penalty is waived in the following cases:
1. You owe less than $1,000
2. You paid in at least 90% of your tax liability.
3. You paid in at least 100% of the PRIOR year's tax liabilty -- 2005 in this case.
Item #3 is what gets most folks off the hook for underpaid taxes since most folks' tax liability goes up each year. I just paid over $11,000 in taxes because I sold a rental house. However, the total withheld by my employer for 2006 was several hundred more than my tax liability on my 2005 return so I owed no penalty for underpayment of that $11,000.
2007-04-01 22:17:54 · answer #2 · answered by Bostonian In MO 7 · 3⤊ 0⤋
Ask your tax preparer to "annualize" the penalty. The penalty computation will take into account that you received the cash in August, and the penalty will be reduced from a non-annualized penalty computation.
The annualized method of computing the penalty is decribed here:
http://www.irs.gov/pub/irs-pdf/i2210.pdf
If you had paid earlier, the penalty would be less, so don't delay.
2007-04-01 21:18:32 · answer #3 · answered by ninasgramma 7 · 2⤊ 0⤋
You could owe a penalty for underwithholding, but if you paid in at least what your total tax liability was for 2005, any underwithholding penalty would be waived.
2007-04-01 23:28:09 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
If it's a windfall type thing (which this would be) you can sometimes spread it out over three years. I'm not sure of the laws, so get advice. This reduces your tax burden.
2007-04-01 21:39:45 · answer #5 · answered by Anonymous · 0⤊ 1⤋
doubtful you would owe a penalty.
there's a form 2210,, on that form you can usually find a way out of any penalty for a situation like yours.
2007-04-01 21:15:58 · answer #6 · answered by Jo Blo 6 · 0⤊ 2⤋
Do yourself a favor. Go to www.taxmama.com She is amazing at helping people with their tax questions...for free!
Good luck!
2007-04-01 21:18:02 · answer #7 · answered by vamedic4 5 · 0⤊ 2⤋
When it comes to money the government will come after you for that. You have to pay that tax.
I suggest you call H&R block..
Dont bother calling the IRS.. you will never get through because its so busy.
2007-04-01 21:14:50 · answer #8 · answered by nickamc80 2 · 0⤊ 5⤋