Safe Harbor With Holding Penalty When You File with an Extension

Forum|Forum|2 years ago
February 17, 2024
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I know that the IRS gives you safe harbor from the under withholding penalty if you paid at least 100% of the tax owed in the prior year or 90% of the tax owed in the current year. Do these exceptions also apply if you will be requesting an extension and filing later?

I know that my withholding for the 2023 tax year is at least 100% of what I owed for the 2022 tax year. I will be requesting an extension and filing later because I am waiting for a form K-1 from the executor of my sibling's estate. Since my with holding meets the 100% requirement will I have no penalty due if my with holding did not cover what I owe for 2023, and I have to make an additional payment when I file the return after April 15th but before the October deadline?

Best answer by JohnB5677

You must make a payment by April 15th that will bring you up to 90% of your current years (2023) taxes.

The 100% of your previous year (2022) will cover you up to April 15th.
After April 15th the other rules kick in.
Please see this article on Filing an Income Tax Extension, see the section on Need to use a credit card to pay taxes owed?

JohnB5677Answer

You must make a payment by April 15th that will bring you up to 90% of your current years (2023) taxes.

The 100% of your previous year (2022) will cover you up to April 15th.
After April 15th the other rules kick in.
Please see this article on Filing an Income Tax Extension, see the section on Need to use a credit card to pay taxes owed?

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glerbnik84Author

Thank you!!

Mike9241

that 100% is 110% if your 2022 adjusted gross income was over $150k (1/2 that if married filing separate). taxes are due on 4/15.so you would be safe from underpayment penalties if you meet the safe harbor tests. However, any balance owed and not paid by 4/15 is subject to late payment penalties and interest,