I owe an estimated tax penalty for Maryland ???
I inherited a large sum of money last year and when I got the disbursment I did not know that the financial inst did not take out maryland tax only Fed. I did my taxes yesterday and ended up owing $5050 in MD state taxes. We had paid into $4800 through payroll deductions.
Is there a way to get around having to pay the penalty for a situation like this.
This is the 1st time we ever owed taxes and always got a refund.
I know ignorance is no exception to the law but there should be some leniency in cases such as a disbursemant of a death benefit.
I look forward to your imput.
- Anonymous1 decade agoFavorite Answer
The shortfall is probably within tolerances for not asserting the penalty. You may also be entitled to an exemption based on last years tax.
- naekuoLv 71 decade ago
Section 10-815 of the Tax-General Article of the Annotated Code of Maryland requires every individual, or individuals filing jointly, who receives taxable income which is not subject to Maryland withholding or from which not enough Maryland tax is withheld to file a Declaration of Estimated Tax if the income can be expected to develop a tax of more than $500 in excess of the Maryland withholding. Furthermore, Sections 13-602 and 13-702 stipulate that any individual so required to file, who either (1) fails to file on the date or dates prescribed; (2) fails to pay the installment or installments
when due; or (3) estimates a tax less than ninety (90) percent
of the developed tax shown on the return for the current tax year and less than 110% of the tax paid for the prior year, shall be subject to penalty and interest.
PS Recalculate your 502UP. You maybe suprised. Me live in CA :)
- FRANKLv 51 decade ago
You should include a note stating that you were of the opinion that the ALLL the required taxes had been deducted, and that you were receiving a net check. You discovered at tax time that the tax deducted was only for federal tax, and that no Maryland tax was deducted. That should help avoid any penalty.
- Anonymous4 years ago
yes the IRS is nice enough to allow tax payers to pay in installments. However your penalties will still have to be payed over the installments and they will charge interest. Also they raised the fees this year, but if you choose to have direct payment from your checking account it will save you a couple of bucks from fees.