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Just curious - in the US - say it's the first time you are filing taxes.

(I suppose the only two possibilities are either (A) you happened to move from overseas or (B) imagine a highly successful teen idol type who suddenly made a lot of money and previously was just a kid and/or made zero money.)

So in 2017 you made $500,000.

It is 100% 1099 income.

But you have never, ever dealt with the IRS before and it's your first filing.

For concreteness say you were paid evenly spaced throughout the year.

In fact - - do you pay the small penalty for not having paid estimated taxes as you go along?

Or are you sort of "exempt" your first go around?

  • But note that you will owe interest for paying later than Apr/17 - even if you filed for an extension. – Aganju Feb 13 '18 at 16:42
  • @Aganju That'd be April 2018, since earnings were 2017. – Hart CO Feb 13 '18 at 17:05
  • Apr/17 in 2018. the 17 was the day (in 2018, taxes are due on the 17th because of Sunday and a DC Holiday) – Aganju Feb 13 '18 at 17:53
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    @Aganju: Apr/17 is not the way most people in the US would abbreviate April 17th. It would be assumed that you meant April of 2017. – jamesqf Feb 13 '18 at 18:32
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    You wouldn't have to be a "highly successful teen idol" for this question to be relevant. Just someone whose first real income is not subject to withholding. Like someone graduates high school and starts a small business rather than getting a job working for someone else. Probably relatively rare but surely not unheard of. – Jay Feb 13 '18 at 18:36
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No. From 1040-ES:

Exception. You do not have to pay estimated tax for 2017 if you were a U.S. citizen or resident alien for all of 2016 and you had no tax liability for the full 12-month 2016 tax year. You had no tax liability for 2016 if your total tax was zero or you did not have to file an income tax return.

  • you guys know everything ! – Fattie Feb 13 '18 at 18:51
  • This covers case A in the question only if you are a US citizen who was previously living 'overseas' -- which US people generally use to mean in a foreign country, even though Canada, Mexico, and Central and South America are not in fact overseas, and HI, PR, Guam etc are). – dave_thompson_085 Feb 15 '18 at 0:03
  • How does it not address case B, someone who did not owe tax last year but owes tax this year? – Magua Feb 15 '18 at 14:58
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In fact - - do you pay the small penalty for not having paid estimated taxes as you go along?

No, an exception to the penalty for underpayment of estimated taxes is made when no tax liability existed in the prior year. Instructions for Form 2210 indicate:

Exceptions to the Penalty
You won't have to pay the penalty or file this form if either of the following applies.

  • You had no tax liability for 2016, you were a U.S. citizen or resident alien for the entire year (or an estate of a domestic decedent or a domestic trust), and your 2016 tax return was (or would have been had you been required to file) for a full 12 months.

....

  • another fantastic answer on the awesome Money site ! – Fattie Feb 13 '18 at 18:51

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