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For the safe harbor rule for underpayment penalties, you don't have to pay a penalty if:

You expect your withholding and tax credits to be less than the smaller of: a. 90% of the tax to be shown on your 2023 tax return, or b. 100% of the tax shown on your 2022 tax return.

For b. does this means line 24 (Total Tax) on my prior year's 1040?

And does the withholding mentioned above only apply to federal income tax withheld from W2 income, or does it include FICA withholding as well?

Thanks

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    Note that if the previous year AGI was above $150k, the (b) safe harbor is 110% of previous year tax instead of 100%.
    – user102008
    Commented Aug 1, 2023 at 16:52

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For b. does this means line 24 (Total Tax) on my prior year's 1040?

For the most part. Form 2210 has slightly different inputs that might result in a different output than line 24, but for most (uncomplicated) taxpayers it will come out the same or very close.

And does the withholding mentioned above only apply to federal income tax withheld from W2 income, or does it include FICA withholding as well?

It doesn't include FICA withholding or underwithholding. Form 1040 Schedule 2 Part II (Other Taxes) line 6 is "Uncollected Social Security and Medicare tax on wages", which the instructions for Form 2210 excludes for line 2. It also excludes lines 5 and 13 from Schedule 2, which also relate to uncollected FICA taxes.

However, SECA (Self-Employed Contributions Act) taxes, which are the self-employed version of FICA, are included in the Form 2210 calculation. SECA is on Schedule 2 line 4 "Self-employment tax".

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And does the withholding mentioned above only apply to federal income tax withheld from W2 income, or does it include FICA withholding as well?

For regular FICA withholding, no. The underpayment penalty is only about income tax and income tax witholding, not FICA tax. Regular FICA withholding should be the right amount for your wages.

But if you had excess Social Security tax withheld due to having multiple jobs and exceeding the maximum amount of Social Security tax per year, that excess is counted the same as estimated tax payments on Form 2210 line 11, with 1/4 of the excess considered paid in each quarter, so it will have the same effect as withholding for the purposes of avoiding a penalty.

Also, Additional Medicare Tax is considered income tax, so it is included in the calculation. Additional Medicare Tax withholding (which is included on Form 1040 line 25c) is included in the withholding on Form 2210 line 6, and Additional Medicare Tax liability (Form 1040 Schedule 2 line 11) is included in Form 2210 line 2 as part of current year taxes.

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