Monthly Archives: August 2021

Our Olympic Champs Get a Tax Break

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Article Highlights:

Olympians’ Prize Money 
Who Gets Taxed? 
Gold Medals Aren’t Solid Gold 
Value of Medals if Sold 

You may not realize this, but in addition to winning an Olympic medal, winners are compensated by the U.S. Olympic Committee with prize money: $37,500 for winning a gold medal (up from $25,000 in the 2016 games). Prize money for winning a silver medal is $22,500 (up from $15,000 in 2016) and $15,000 for a bronze medal (up from $10,000). Olympic medals and prize money are currently tax-free for most Olympians. Congress passed a tax law in 2016 exempting Olympians, including Paralympic winners, from tax on their prize money and medals if their adjusted gross income (AGI) for the year is $1 million or less ($500,000 or less, if married filing separately). However, in addition to the prize money, many of the more successful and well-known athletes also have commercial endorsement contracts that bring in big bucks that can easily push their incomes over $1 million, which will make their Olympic prize money taxable. Oh, and by the way, the gold medals are not solid gold. In fact, they haven’t been solid gold since the 1912 Stockholm Games. According to the International Olympic Committee, each gold medal contains far more silver than gold, roughly 6 grams of gold and 556 grams of silver, with a metal value of approximately $800. The silver medal weighs in at 550 grams of pure silver with a metal value of roughly $450, and of course, a bronze medal cost is significantly less. But that is cost based upon the precious metals, not the price a medal might bring from collectors on the open market or via auction houses. Adding to the value of a medal is who won the medal or other significance. For example, a gold medal won by a member of the 1984 U.S. Basketball team went for over $80,000 and $1.5 million was paid for a gold medal won by Jessie Owens at the 1936 Germany Olympics. However, these are medals won by those with celebrity status and bring top dollar from collectors. Others have sold for far less – in the $1,000 range. As you might expect, because of the sentimental value to the athletes very few medals ever reach the market. But when they do, they are quickly gobbled up by niche collectors treating them the same as other collectors’ treat rare coins or comic books. And of course, the special tax benefits that applied to their original prize money will not apply to the subsequent sale of a medal. But if they hold the medal for a year and a day before selling it, they will qualify for the lower capital gains tax rates. But that may not be an option in the future, as President Biden’s tax plan would do away with the capital gains rates for higher income taxpayers.

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Video Tip: Tax Ramifications of Disposing of an Old Vehicle

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Are you disposing of an old vehicle? Whether you are trading in, selling, or donating, different methods may lead to different tax ramifications. Watch this video for a quick overview of what you can do with your old car and how that will affect your taxes.
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Tax Breaks for Grandparents

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Article Highlights:

Head of household filing status
Earned income tax credit
Child tax credit
Child care credit for certain working grandparents
Grandchild education credits
Medical and dental expenses

More and more individuals who thought their child-rearing days were over are now raising their grandchildren. It is estimated that 6.5 million children in the United States currently live with at least one grandparent, accounting for approximately 9% of all children nationally and more than half of those not living with their parents. Another study found that the number of grandchildren living with their grandparents has increased 50% over the past ten years. Grandparents in this challenging situation should be aware that a variety of tax breaks may be available to ease the financial burden of becoming primary caregivers for grandchildren. These include:

Head of household filing status – An unmarried grandparent may be eligible to use the head of household filing status. This filing status generally is more favorable than the single filing status. To qualify, the grandparent must maintain a household that is the principal place of abode for the grandchild for more than half the year. Generally, the grandchild must not be self-supporting and must be under the age of 19 (24 if a full-time student) at the close of the tax year or permanently and totally disabled.
Earned income credit – A grandparent who is working and has a grandchild who is a qualifying child living with him or her may be able to take the earned income tax credit (EITC), even if the grandparent is 65 years of age or older. Generally, to be a qualified child for EITC purposes, the grandchild must meet the same requirements as to be a dependent but without the requirement that the child didn’t provide more than half of their own support. To qualify for EITC for 2021 on account of a grandchild or grandchildren, a taxpayer’s adjusted gross income (AGI) must be less than: $51,464 ($57,414 for married filing jointly) if he or she has three or more qualifying children; $47,915 ($53,865 for married filing jointly) if he or she has two qualifying children; and $42,158 $48,108 for married filing jointly) if he or she has one qualifying child. There’s no EITC if the taxpayer files as married filing separately, isn’t a U.S. citizen or resident alien all year, files Form 2555 or Form 2555-EZ (relating to foreign earned income), doesn’t have earned income, or has more than $10,000 of investment income for 2021 ($3,650 for 2020).
Child tax credit – A grandparent who is raising a grandchild may qualify for a $2,000 child tax credit and, under certain specific circumstances, up to $1,400 of the credit may be refundable. To qualify, the grandchild must be under the age of 17, a U.S. citizen or resident alien, and the grandchild must be the grandparent’s dependent. The credit is reduced for higher-income taxpayers. Note: For 2021 only, as part of the COVID relief, the child tax credit was increased to $3,000 for children under the age of 18 ($3,600 for children under age 6) and the credit is fully refundable.
Credit for grandchild care expenses – A grandparent may also qualify for the child and dependent care credit if the grandparent pays someone to care for a dependent grandchild under the age of 13 or a grandchild who is physically or mentally not able to care for himself or herself, and the grandparent works or looks for work and has the same principal place of abode as the grandchild for more than half the tax year. The credit is 35% of employment-related expenses for taxpayers with an AGI of $15,000 or less. The percentage decreases by 1% for each $2,000 (or fraction thereof) of AGI over $15,000, but never below 20%. The maximum amount of employment-related expenses that may be used to compute the credit is $3,000 for one qualifying individual or $6,000 for two or more qualifying individuals. These maximums must be reduced, dollar-for-dollar, by the total amount excludable from gross income through an employer’s dependent care assistance program. Note: For 2021 only, as part of the COVID relief, the maximum amount of expenses that can be used to compute the credit is increased to $8,000 for one qualified individual and $16,000 for two or more qualified individuals, and the credit percentage is a full 50% the expenses before high-income phaseout and is fully refundable.
Grandchild education expenses – There are a number of tax breaks that may be available to a grandparent who pays his or her dependent grandchild’s education costs. These include:
o Education credits – An individual taxpayer may claim an income tax credit of up to $2,500 for the American Opportunity tax credit (AOTC) and the Lifetime Learning credit (up to $2,000) for higher education expenses of their dependent grandchild at accredited post-secondary educational institutions. The AOTC is available for qualified expenses of the first four years of undergraduate education. The Lifetime Learning credit is available for qualified expenses of any post-high school education at “eligible educational institutions.” Both credits can’t be claimed in the same tax year for any one student’s expenses, and they phase out for higher-income taxpayers. o Deduction for interest on qualified education loans – Grandparents may qualify to claim an above-the-line deduction for up to $2,500 of interest paid on a qualified higher education loan for any debt they incurred solely to pay qualified higher education expenses for a dependent grandchild, who is at least a half-time student. The deduction phases out for higher-income taxpayers.
These education tax benefits only apply to a grandparent who claims the grandchild as a dependent. Many generous grandparents pay these types of expenses for a non-dependent grandchild, but unfortunately, they get no tax breaks for doing so.
Medical and dental expenses – A grandparent who itemizes deductions can deduct certain unreimbursed medical and dental expenses paid for a dependent grandchild during the year. The grandchild’s medical expenses are combined with the grandparent’s medical deductions and are allowed to the extent that the total exceeds 7.5% of the grandparent’s adjusted gross income for the year.

The foregoing is an overview of the tax benefits available to grandparents. Not all limits and requirements were covered in complete detail. Please contact this office to determine if you qualify for one or more of them.

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Mid-Year Tax Planning Checklist

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Article Highlights:

Mid-Year Planning 
Avoiding Unpleasant Surprises 
Events That Have Tax Consequences 

All too often, taxpayers wait until after the close of the tax year to worry about their taxes and miss opportunities that could reduce their tax liability or financially assist them. Mid-year is the perfect time for tax planning. The following are some events that can affect your tax return; you may need to take steps to mitigate their impact and avoid unpleasant surprises after it is too late to address them. Here are some events that can trigger tax consequences. Did you (or are you going to):

Get married, divorced, or become widowed? 
Change jobs or has your spouse started working? 
Have a substantial increase or decrease in income? 
Have a substantial gain from the sale of stocks or bonds? 
Buy or sell a rental?
Start, acquire, or sell a business? 
Buy or sell a home? 
Retire this year? 
Reach age 72 this year? 
Refinance your home or take out a second home mortgage this year? 
Receive a substantial inheritance this year? 
Take advantage of tax-beneficial retirement savings? 
Make any significant equipment purchases for your business? 
Purchase a new business vehicle and dispose of the old one? 
Adequately document your cash and non-cash charitable contributions? 
Keep up with your self-employed estimated tax payments? 
Make any unplanned withdrawals from an IRA or pension plan? 
Add a solar electric system to your home or purchase an electric vehicle? 
Hire veterans’ or other individuals in your business that may qualify for the work opportunity tax credit? 
Trade in cryptocurrency? 
Defer employer payroll taxes in 2020? 
Incur expenses adopting a child? 
Start receiving Social Security benefits? 
Exercise an employee stock option? 
Start using a part of your home for business this year? 
Exchange real properties used in your trade or business or held for investment? 
Start a retirement plan in your self-employment business? 
Make gifts of over $15,000 to anyone individual this year? 
Receive advance child tax credit payments? 

Of course, these are not the only issues that have tax consequences. If you anticipate or have already encountered any of the above events or conditions, it may be appropriate to consult with this office—preferably before the event—and definitely before the end of the year.

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Here's What Happened in the World of Small Business in August 2021

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Here are five things that happened this past month that affect your small business. 1) The Senate passed a $1.2T infrastructure package. At the beginning of August, the Senate passed a bipartisan infrastructure package, “the largest upgrade to the country’s roads, bridges, pipes, ports and broadband in decades.” There are a few steps left before this bill becomes law, but it is expected to make its way through the House of Representatives and be signed by President Biden. (Source: The Washington Post) Why this is important for your business: Many aspects of the bill present revitalization prospects for small businesses, including the money set aside for broadband and power infrastructure. 2) We are better understanding how many workers retired early during the pandemic.“Roughly 2 million more people than expected have joined the ranks of the retired during the pandemic,” according to a new analysis. Some of these workers chose to retire early, while others “were forced into retirement after losing their jobs or quitting out of fears of exposure to COVID-19.” (Source: NPR) Why this is important for your business: The economy is changing, and business owners should be aware of how their hiring pool may shift in coming years. With 10,000 baby boomers retiring every day, millennials and Gen Z are set to become an even larger proportion of the workforce. 3) The government opened a Paycheck Protection Program (PPP) loan forgiveness portal. To help expedite the process of getting PPP loans forgiven, a new portal was opened “through which small businesses that borrowed up to $150,000 can apply to have their loans eliminated.” About 92% of PPP loans fall under this cap. However, some lenders – including some larger banks – are choosing not to use the portal and to stick with their own processes instead. (Source: The New York Times) Why this is important for your business: If you received a PPP loan that has not yet been forgiven, this portal could help you eliminate that debt faster – but only if your lender is allowing it. 4) A judge ruled that California’s gig worker initiative (Proposition 22) is unconstitutional. A California judge has ruled that Proposition 22 – a 2020 ballot measure exempting ride-share and food delivery drivers (think Uber, Doordash, and Instacart) from a state labor law – is unconstitutional “as it infringes on the legislature’s power to set workplace standards.” (Source: Reuters) Why this is important for your business: This is another piece of news on the nationwide battle over the gig economy and worker classification. Continue to pay attention to developments on this issue, as it will likely affect businesses far into the future. 5) Consumer sentiment hit a pandemic-era low as fears over the delta variant rise. The consumer sentiment index fell to 70.2 in the preliminary August reading from the University of Michigan. “That is down more than 13% from July’s result of 81.2 and below the April 2020 mark of 71.8 that was lowest of the pandemic era.” It was also the lowest reading for that measure since 2011. This comes as the delta variant of Covid-19 spreads rapidly across the US, leading to some states reinstating health restrictions. (Source: CNBC) Why this is important for your business: Lower consumer sentiment could be an indicator of diminished economic performance, and some consumers may choose to spend less money if they fear a downturn.

How to Use QuickBooks' New Customer Groups

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QuickBooks has a new set of tools that can help you deal with what is probably one of your most pressing problems: getting customers to pay. Here’s how to use this new feature. Creating Your Groups QuickBooks has added an entry in the Customers menu to take you to these new tools. Go to Customers | Payment Reminders | Manage Customer Groups. In the window that opens, click Create Customer Group. QuickBooks then walks you through a three-step wizard. First, you enter a Name for your group in the first field of the Group details window. We’ll call ours ‘California High Balance.’ If you’d like you can add a Description. Click Next. In the Select fields window, you’ll set the filters for the group. If you’d rather open your complete list of customers and choose the ones you want manually, you can skip this step. For our example, we’ll define a group by choosing:

One or more Fields. We want to narrow the group down to California customers. Click the down arrow in the Field box and select State.
An Operator. Here, you’d select Equals.
A Value. QuickBooks will display a list of states. Click the box in front of CA. If you’d like to include more states, you can do so. When you’re done, click Add. You’ll see your Selected fields in the box below.

You can set the parameters for your group by selecting multiple fields, operators, and values.
We want to narrow the list down to customers in California who have open balances of more than $500. So you’d select Open Balance for the Field, Greater Than for the Operator, and 500 for the Value. Then click Add again to move your filter into the Selected fields box. You can keep adding filters to narrow down your list even more if you’d like. When you’re done, click Next. The View/select customers window opens displaying the results of your search in a table whose columns include Name, Overdue balance, and Avg days to pay. There’s a checkmark in the box in front of Automatically add new or remove existing customers based on fields and values selected in this group. If you leave the box checked, QuickBooks will move customers into the group as their open balances top $500 and out when they catch up on their payments. Uncheck the box, and you’ll have to add and remove customers manually, which would take vigilance and a lot of extra work. If you’re satisfied with the list, click Finish, then OK. The Manage groups window now contains an entry for your new group. Entries here are earmarked with icons indicating whether they are manually or automatically updated. You can also click links in the Actions column to edit or delete a group or send an email to it. If you select the last option, a window will open containing your list of customers (you can unselect any of them) and a composition box for your email. Sending Payment Reminders To start working with Payment Reminders, open the Customers menu and click Payment Reminders | Schedule Payment Reminders. Click Let’s get started. From the next window, you can send either invoices or statements. Click New schedule next to Invoice and enter a name in the box that opens. We’ll call ours 15 days past due since we want to create reminders for customers who are more than 15 days past due. We want this to go to all customers who fit the criteria, so click in the drop down list that follows Send reminder to. Call the new group All customers in the window that opens. Click Next, then Next again to display your entire list of customers. Click Finish, then OK. Back on the Schedule payment reminders screen, click + Add Reminder. This overlapping window will open:
You can see and edit what your reminder will say and what fields will be replaced with real data.
Enter 15 after Send this reminder and select after from the drop-down list. QuickBooks supplies a sample email that you can edit if you’d like. Real data will, of course, replace the text in brackets. You can delete any of these and add more by clicking Insert Field in the lower right corner. Be very careful if you modify the bracketed fields. Brackets should surround the exact text that comes from the QuickBooks options supplied. When you’re satisfied with your email, you can Check spelling. Then click OK. You’ll be back at the Payment reminders screen where you can save your reminder or add another. QuickBooks will now prompt you to send reminders when they’re due. You can track them in your customers’ invoice histories and in your sent mail folder. When the time comes, open the Customers menu and select Payment Reminders | Review & Send Payment Reminders. QuickBooks will display a list of reminders that need to be dispatched. Make sure all of the reminders you want to send have a checkmark in the box next to them and click Send Now. There’s nothing difficult about using these new QuickBooks tools, but you should be very careful with them. You don’t want to annoy customers by sending payment reminders unless they’re really warranted. You also don’t want to let late payments languish. Should you choose to use them, we’d be happy to walk you through the process to prevent errors. As always, we’re available to respond to your questions about QuickBooks and to help you make optimal use of it in your business.

When Is Your Business No Longer a Startup?

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There’s a specific sensibility and respect that gets attached to businesses that are referred to as “startups.” There’s a general feeling of risk taking and future-facing enterprise that owners enjoy. But the actual definition of what a startup is can be murky, and even if your business meets the definition in the eyes of the investing community, at what point do you graduate from startup to established business? Startups are pretty loosely defined. They are generally acknowledged to be a subset of small businesses (a category established by the U.S. Small Business Administration for the purpose of qualifying for federal contracts) and earn their name based on either how long they have been in business or in the way that they have approached the industry that they are in. Let’s take a closer look at each. How long they have been in business There are plenty of entrepreneurs who proudly refer to themselves as startups simply based on the fact that their businesses are new and have only been operating for a couple of years. Though this belies the notion that a startup is a disruptor that is doing something new and risky, any new business owner can tell you that whether they’re selling a novel service or an iconic product, they’re taking a real chance by going out on their own. This idea is supported by the Congressional Research Service’s findings about the risk involved in starting a new business. A recent report indicated that “business startups create many new jobs, but have a more limited effect on net job creation over time because fewer than half of all startups remain in business after five years.” Considering a new venture as a startup is a legitimate position to take, but it begs the question of at what point they consider themselves well-established enough to no longer be called a new business, a startup, or anything else indicating their sense of courage combined with concern. How they approach an industry The more traditional characteristics associated with the term “startup” have to do with the way that a business is approaching the industry that they are in. They are either selling an existing product or service in an entirely new way or introducing a brand-new service or product that will be a game-changer for consumers, as well as for their competition. These businesses are taking a different type of chance, as they are betting that their product will take off and offer rich rewards. Businesses that fall into this category are often tech companies but not always. According to Eric Ries, the creator of the Lean Startup methodology, “A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty. To open up a new business that is an exact clone of an existing business, all the way down to the business model, pricing, target customer, and specific product may, under many circumstances, be an attractive economic investment. But it is not a startup, because its success depends only on decent execution—so much so that this success can be modeled with high accuracy.” Does the terminology really matter? Whether your use of the word “startup” refers to your business’ tenure or its goal of turning an industry on its head, in both cases the term indicates that it has a lot of runway ahead. How to Finance a Startup One of the most essential pieces of a new business’ survival is how and where it will get its financing from and calling yourself a startup can impact your options. Traditional lenders like credit unions or banks are notoriously risk-averse, and businesses with two years or less of operational history are unlikely to qualify for funding. If this describes your business you are more likely to find yourself eligible for a personal loan based on your credit score, or a loan or microloan from an online lender based on documented revenues. By contrast, call yourself a startup and you’re likely to draw the attention of venture capitalists, private investors, angel funding or even crowdfunding from people who are eager to take a chance on a promising new idea. These alternative sources of funding are willing to take a risk, and much more interested in your vision and your market research then on your credit history or on actual sales. Are You Well Established Enough? Whether you’ve called yourself a startup because of the newness of your business or of your product, at some point you need to acknowledge that the name no longer fits. Here are a couple of milestones that indicate that you’ve bypassed that stage of your company’s history and have achieved a significant level of success:

If your business has made it past the one-year anniversary of its opening, then you have accomplished what the Small Business Association says that many businesses do not. According to the agency, approximately one in five don’t survive that long. 
If you’ve reached the point where you’re making a profit, then you’ve surpassed most non-employer firms. 
If you’re no longer running the business yourself and you’ve started hiring employees, then you’re doing better than 80% of American small businesses.

Consumers Lost Over $500 Million Due to Covid-related Fraud

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It will be many years before we have a full understanding of what COVID-19 cost us as a society. But as that information is incrementally collected and released, we’re starting to see the picture take shape. One of the most recent reports on the subject was issued by the Federal Trade Commission, which has estimated that consumers victimized by Covid-related fraud lost over $500 million. The numbers are devastating, especially because there is a strong sense that the self-reported losses pale in comparison to those that went unreported. The FTC acknowledges that the more-than 558,000 complaints it has received since the start of 2020 barely scratch the surface of how many consumers have been ripped off by online shopping scams, fraudulent travel websites and other schemes. Far more consumers have likely shrugged off the losses rather than go to the trouble of registering a complaint. But based on the complaints that were lodged (60% of which were specifically associated with fraud), the average theft per person amounted to about $370. It is heartbreaking to realize that fraud continues and thrives in the midst of a global pandemic, and yet this frequently happens in the midst of a tragedy. As citizens have struggled to avoid sickness and deal with isolation and job loss, unethical opportunists have set up fake online shopping and sites and found ways to rob individuals of their government stimulus checks. Even more have tried to take advantage of consumer demand: according to a Consumer Federation report, price-gouging of toilet paper, hand sanitizer, and face masks —items that were in short supply and desperately needed — was the most frequently-lodged complaint to state and local consumer agencies. Others reported issues with lack of refunds related to event cancellations, school and childcare closures. Illegal evictions were also common. Of the 53,000 scams reported to the FTC, the lion’s share was about online shopping fraud, with approximately 16% indicating that as they spent more time indoors and online, they were tricked by “opportunistic websites” that advertised the availability of in-demand items, then never delivered. Consumers filed complaints about sites selling clothing, electronics, hand sanitizer, and pets, but the biggest losses were to sites that refused to issue refunds canceled vacations and travel. Ironically, the Better Business Bureau is reporting that now that travel has resumed, new scams have arisen offering fake airline tickets and other travel accommodations.

September 2021 Business Due Dates

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September 15 – S Corporations
File a 2020 calendar year income tax return (Form 1120-S) and pay any tax due. This due date applies only if you requested an automatic 6-month extension. Provide each shareholder with a copy of their Schedule K-1 (Form 1120-S) or a substitute Schedule K-1.
September 15 – Corporations 
Deposit the third installment of estimated income tax for 2021 for calendar year
September 15 –  Social Security, Medicare and Withheld Income Tax
If the monthly deposit rule applies, deposit the tax for payments in August.
September 15 – Nonpayroll Withholding
If the monthly deposit rule applies, deposit the tax for payments in August.
September 15 – Partnerships
File a 2020 calendar year return (Form 1065). This due date applies only if you were given an additional 5-month extension. Provide each partner with a copy of K-1 (Form 1065) or a substitute Schedule K-1.
September 30 – Fiduciaries of Estates and Trusts File a 2020 calendar year return (Form 1041). This due date applies only if you were given an extension of 5 1/2 months. If applicable, provide each beneficiary with a copy of K-1 (Form 1041) or a substitute Schedule K-1.

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September 2021 Individual Due Dates

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September 1 – 2021 Fall and 2022Tax Planning Contact this office to schedule a consultation appointment. September 10 – Report Tips to Employer If you are an employee who works for tips and received more than $20 in tips during August, you are required to report them to your employer on IRS Form 4070 no later than September 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.September 15 – Estimated Tax Payment Due
The third installment of 2021 individual estimated taxes is due. Our tax system is a “pay-as-you-earn” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-earn” requirement. These include:

Payroll withholding for employees;
Pension withholding for retirees; and
Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding.

When a taxpayer fails to prepay a safe harbor (minimum) amount, they can be subject to the underpayment penalty. This penalty is equal to the federal short-term rate plus 3 percentage points, and the penalty is computed on a quarter-by-quarter basis.
Federal tax law does provide ways to avoid the underpayment penalty. If the underpayment is less than $1,000 (the de minimis amount), no penalty is assessed. In addition, the law provides “safe harbor” prepayments. There are two safe harbors:

The first safe harbor is based on the tax owed in the current year. If your payments equal or exceed 90% of what is owed in the current year, you can escape a penalty.
The second safe harbor is based on the tax owed in the immediately preceding tax year. This safe harbor is generally 100% of the prior year’s tax liability. However, for taxpayers whose AGI exceeds $150,000 ($75,000 for married taxpayers filing separately), the prior year’s safe harbor is 110%.

Example: Suppose your tax for the year is $10,000 and your prepayments total $5,600. The result is that you owe an additional $4,400 on your tax return. To find out if you owe a penalty, see if you meet the first safe harbor exception. Since 90% of $10,000 is $9,000, your prepayments fell short of the mark. You can’t avoid the penalty under this exception.
However, in the above example, the safe harbor may still apply. Assume your prior year’s tax was $5,000. Since you prepaid $5,600, which is greater than 110% of the prior year’s tax (110% = $5,500), you qualify for this safe harbor and can escape the penalty.
This example underscores the importance of making sure your prepayments are adequate, especially if you have a large increase in income. This is common when there is a large gain from the sale of stocks, sale of property, when large bonuses are paid, when a taxpayer retires, etc. Timely payment of each required estimated tax installment is also a requirement to meet the safe harbor exception to the penalty. If you have questions regarding your safe harbor estimates, please call this office as soon as possible.
CAUTION: Some state de minimis amounts and safe harbor estimate rules are different than those for the Federal estimates. Please call this office for particular state safe harbor rules.

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