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Find Safe Harbor in Estimated Tax Rules

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Q. I racked up a big stock gain earlier this year. Now, I realize I should have paid estimated tax. Will I have to pay a penalty if I wait to file my return? G.B., Fairfax, Va.

A. Not necessarily. Under special safe-harbor rules, no estimated tax penalty is imposed if your payments for 2006 equal at least 90 percent of your current tax liability or at least 100 percent of your prior year’s tax liability (110 percent if your AGI for the prior year exceeded $150,000). So, you can sidestep potential problems by meeting either safe-harbor rule. Tip: Withholding amounts deducted from your pay count as estimated tax payments.

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