Strategy: Rely on IRS-approved exceptions to avoid the penalty. If you qualify for any one of three exceptions, you’re off the hook for the penalty.
Specifically, no penalty is imposed if you:
- Pay at least 90% of your current year’s tax liability
- Pay at least 100% of your 2015 tax liability (110% if your 2015 AGI exceeded $150,000)
- Pay at least 90%, based on your 2016 “annualized income.”
The last method often works best for individuals whose income is received on a seasonal basis, such as building contractors, landscapers, and retail business owners.
Tip: The easiest way to avoid a penalty is to pay the tax based on 100% (or 110%) of last year’s liability—you already know for sure what that is.
- Small Business Tax Deduction Strategies No matches