April- 15 Estimated Tax Payment Due

It's Time to make your first quarter estimated tax payments for the 2008 tax year. Our Tax system is a "pay-as-you-go" system. To facilitate that concept,the government has provided several means of assisting taxpayers in meeting the pay-as-you-go " requirement. These include:

*Payroll withholding for employee;
*Pension withholding for retirees;and
*Estimated tax payments for self- employed individuals and those with other sources of income not covered by withholding.

When a taxpayer fails to repay a safe harbor (minimum) amount, they can be subject to the underpayment penalty. This penalty is 2% higher than prime rate and the penalty is computed on a quarter-by-quarter basis.

Federal tax law does provide ways to avoid to the underpayment penalty. If the underpayment is less than the $1000 de-minimis amount, no penalty is assessed. In addition, the law provides "safe harbor" prepayments. There are two safe harbors:
1.The first safe harbor is based on the tax owed in the current year. If your payments are equal or exceed 90% of what is owed in the current year, you can escape a penalty.
2.The second safe harbor is based on the tax owed in the immediately preceding tax year. This safe harbor is generally 100% of the prior year's tax liability. However, for higher-income taxpayers whose AGI exceeds $150,000 ($75,000 for married taxpayers filing separately), the prior year's safe harbor is 110%.