Video instructions and help with filling out and completing Fill Form 2220 Payments

Instructions and Help about Fill Form 2220 Payments

We have said with the business credits that one of the things that overlaps with business credits is withholding and the withholding the withholding I the employer is responsible for withholding the Social Security and the federal income tax matching the Social Security payments and paying them over at least quarterly to the IRS if credits are if Social Security is withheld from more than one employer and the employee is only responsible for say one hundred and thirteen thousand seven hundred but between the two employers more than that was withheld the extra amount withheld becomes a refundable credit to the employee there's also something called back up with holder withholding employers require that your social security number go to the accounting office and that the accounting office then use that to reform in the employee's name you just really can't get employed without social security number or other similar work documentation but you can open a bank account without one and they ask for an employer identification number but if you do not give them one they will instead with all twenty eight percent of whatever earnings you have trusts will do the same in addition to withholding and backup withholding there are also estimated payments if someone is self-employed and they owe more than a thousand dollars or if they have more than four hundred dollars and self-employment earnings they are supposed to make quarterly estimated payments now you can get out of that requirement if your household also has withholdings and the withholdings more than cover your liability the four hundred dollars though in self-employment income triggers self-employment tax in addition to federal income tax normally you pay one forth in the first quarter 14 for the second quarter one fourth for the third quarter one fourth fourth fourth quarter but what if you're a business that sells Christmas trees you don't have a lot of business in March and if you don't have a lot of business in March than what happens is you can actually hear something called an annualised method an annualised method that says you pay your liability in the quarters that it was incurred especially when there's uneven income the amount that you owe is the lower of ninety percent of the current year's tax or one hundred percent of last year's tax that hundred percent pumps to 110 percent if your AGI is over 150,000 now that rule is really important and tested frequently and it has a chain it has changed some for years but it tends to come back to the same place over and over again quarterly estimated payments are due april fifteenth the 15th day after the first quarter that makes sense but we don't give you three more months to come up with a second quarter indeed the second quarters taxes due two months later june fifteenth the third quarters payment is due September 15 even though the third quarter isn't over yet and the final payment is due estimated quarterly payment is due january fifteenth now if you fail to make the estimated payments or you fail to have enough withheld through your w-2 there's a payment for under withholding and I repeat the rule because the rule is frequently tested the payment for under withholding works out to be about six percent per year with half year of tax liability outstanding for it this is about thirteen percent per year but with only half your tax liability outstanding on average throughout the year about half of 13 is six six and a half percent tends to be the penalty for under withholding and again that only kicks into place if you do not have enough paint into the government if you look over withheld there's absolutely no penalty for that whatsoever finally I list a bunch of payments on the next slide and you don't need to know the amount of these payments I'm going to start with the underpayment penalty that's found on Form 2210 but if you haven't made enough so you think oh I won't file there is a penalty for that and it's five percent of attacks do if you think I can't afford it i'm not going to pay there's a penalty for that if you're under ensure there will be a penalty for that however unlike the other penalties the IRS cannot issue liens or levies for the underinsured penalty and children are subject to the mandate but the parents are the one that owes the penalties or if there are any penalties for not ensuring the children there are households that are exempt from this underinsured penalty coming up and these are households that are below the income tax filing threshold and had and for households that had coverage for at least nine months of the year or the insurance was more than eight percent of their household income that's the last slide I have in this module and this if you're taking them a sequence will be the last module in chapter seven