Use Federal forms here:
Once you start sending them in government will send you forms next year
with envelopes filled in for you.
Find Delaware tax forms here:
I only send in the feds now and DE were a PITA to get in the past and I
just paid at the end of the year but they came back after 2 years
wanting me to pay a penalty.
I just make rough estimates for quarterly payment of feds and now just
give them 40% of any extra money I make consulting.
I had been deducting a third last year but still owed the feds.
40% is top tax bracket and you have to make about $400,000 per year
which I certainly do not.
Problem is untaxed social security. SS is not taxed at low levels but
is taxed at higher levels. My income is SS, pension, 401k and other
interest. Add extra consulting income and it raises my taxes
disproportionately. There are other ways to handle it like higher 401k
taxes but I do not expect to consult sometime in the future and would
have to readjust again. Taxes are a PITA and system needs fixing. I
read that more effort is expended on paying taxes than in total US
automobile manufacture. I'm sure all those accountants would object to
Doesn't make sense to me..."excess" SS is taxed at the same marginal
rate as any other ordinary income. If you're hitting higher marginal
rates wonder if you're being subject to the AMT owing to high
state/local taxes in your locale that aren't deductible for AMT or somesuch.
Something "just don't seem right" -- we pay estimates, but only up to
the amount of the previous year to avoid penalty; there's no sense in
paying until the deadline more than the minimum; simply ensure you do
have sufficient cash to write the check.
I use Turbotax which as you run it shows plus or minus values for
federal tax. It was on the plus side until I entered SS, which I
believe was last on my list of income, and then it went negative and
I'd have no problem paying all owed at the end of the year but while the
feds and the state are allowed to owe you a ton of money at the end of
the year you are only allowed to owe them so much before they charge you
with a penalty.
This happened to me with the state several years ago and they let two
years expire before they started penalizing me. They do not distribute
their quarterly forms and make you call to get them. The day I called,
nobody was there so I figured the hell with it I will pay at the end of
the year. I did but then got penalized two years later. Lovely people.
Well, yes, if you hadn't sufficient witholding or estimated paid...but
the rate would be the same marginal for that income whatever order it
were added. SS isn't taxed any differently than any other ordinary
income at that level of income.
For Federal, you will avoid penalty if
a) owe less than $1,000 in tax, or
b) pay the lesser of 90% of the tax for the current year or 100% of the
tax for the prior year.
IOW, if your income is as great as prior years (or greater) and you have
no large offsetting deductions you can be sure of avoiding the penalty
simply by ensuring you withhold what previous year's tax was.
I see your trouble was with State and not the IRS, however; don't know
which state that might be so no idea on their rules but this state
follows federal very closely, but you'll need to investigate their rules
specifically to know.
Just for completeness, of course it's possible that it's "the straw on
the camel's back" that pushes your taxable income into the next higher
bracket which makes it appear as though it's being treated differently
but you'd end up in the same bracket anyway if you entered the income in
I've forgotten where the breakpoints are but I worked really, really
hard for a few years after retired from the consulting gig and before
the farm income increased to ensure I pulled every dime could from the
IRA and still keep at or just barely over the 15% bracket before having
to start the RMD to take as much advantage as could of the lower rate...
"They" only owe you a ton of money if _you_ have overpaid through the
year...ain't their fault if you do that either on purpose as many do
with the mistaken feeling they're getting something wouldn't otherwise
have had come spring.
OTOH, yes, there are limits to how much underpayment you can get by with
before the penalty clause comes into play--but there are ways to ensure
you don't get caught; see the previous note on the ordinary case options.
I'll only add that unless it is truly egregious, at least w/ the IRS one
can usually get the penalty waived or, if not in its entirety,
significantly reduced. It helps if you've got a professional on your
side who knows the ropes in dealing w/ the IRS; it's really a case for
"the trained professional", the DIY'er usually gets steamrolled.
So, then it becomes a case of how much is at stake; is it worth a fight?
Again, that's been my experience w/ IRS; can't speak of an unknown
State's penchant for "playing hardball".
I'd have at least had the CPA who does our returns write a letter
requesting the penalty waiver and pay any interest. All they can do is
If didn't use a professional, I'd still write the letter given what the
CPA has told me re: penalties for inadvertent cases altho I'd be less
hopeful for the desired outcome. Again, "can't hurt". :)
We pay a flat rate for the year-end farm return and in return get
"gratis" occasional bits 'n pieces during the year. In a case such as
this, they'd sorta' be on the hook already if had prepared the return
unless we didn't follow the advice and underpaid estimates or otherwise
by our own negligence caused the penalty.
Not widely advertised by the IRS, but at no additional cost you can
schedule automatic payment of your quarterly estimated federal income
tax at this web site:
You pay using free ACH funds transfer from the bank (or credit union)
savings or checking account you designate. You can specify the amount
for each quarter (doesn't have to be the same amount each quarter) and
the exact date you want the payment to be made. No more worry about
forgetting to pay on time or the envelope getting lost in the mail.
Your monthly bank statements clearly show the withdrawal and provide
verification of payment in the event of an audit or claim of non-payment.
Maryland has an analogous system that is just as easy to use. Don't
know about any other states.
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