I paid $1600 in taxes for last year. This year I already paid $2900 from my regular job. However I've been daytrading this year and made an additional 30k so far and haven't paid any taxes. Will safe harbor protect me? Does the $2900 income tax from work count as 110% of the previous year?
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How does safe harbor work for estimated taxes?
- Thread starter Steven W
- Start date
In this context, the term "safe harbor" seems to be used as a euphemism for "tax evasion". Are you looking for advice on how to hide your income, or for an advice on how to declare your trading income properly? If it's the latter (and assuming you are in the U.S.), you have 2 options:
1. pay your estimated taxes using IRS form 1040-ES (tax on income not subject to witholding), during this calendar year
2. pay your total taxes by April of next year, but with the interest penalty
1. pay your estimated taxes using IRS form 1040-ES (tax on income not subject to witholding), during this calendar year
2. pay your total taxes by April of next year, but with the interest penalty
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If amount paid in through your wages is greater than total tax from last year there will not be a penalty.In this context, the term "safe harbor" seems to be used as a euphemism for "tax evasion". Are you looking for advice on how to hide your income, or for an advice on how to declare your trading income properly? If it's the latter (and assuming you are in the U.S.), you have 2 options:
1. pay your estimated taxes using IRS form 1040-ES (tax on income not subject to witholding), during this calendar year
2. pay your total taxes by April of next year, but with the interest penalty
If amount paid in through your wages is greater than total tax from last year there will not be a penalty.
Agreed. For that option, the OP would need to instruct the payroll to make extra deductions from the paycheck.
In this context, the term "safe harbor" seems to be used as a euphemism for "tax evasion".
Don't think so. You should probably look up what safe harbor means. In this case, the OP will not owe an estimated tax penalty even if he pays no estimated taxes. He will owe a balance at year end, but that is a separate question.
You should probably look up what safe harbor means.
I stand corrected. Looks like "safe harbor" is an IRS rule which deals with the quarterly estimated taxes. Mea culpa.
Far too few mea culpas around here, my respect for you just went up.I stand corrected. Looks like "safe harbor" is an IRS rule which deals with the quarterly estimated taxes. Mea culpa.