Important Reminders

Household employment taxes. When figuring the penalty for failure to pay estimated income tax, you generally must include with your estimated taxes any household employment taxes that you may have to pay.

Who must pay estimated tax. You will not be liable for the penalty for failure to pay estimated income tax if the total tax shown on your return minus the amount you paid through withholding (including excess social security and railroad retirement tax withholding) is less than $1,000.

Exception to use of prior year's tax. Certain taxpayers (other than farmers and fishermen) must use 108.6% of their 1999 tax to figure any 2000 underpayment penalty. See Higher income taxpayers under General Rule, later.

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