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Show financial planning Kathy Engle Mark Hulet HULET& ASSOCIATES Certified Public Accountants ESTIMATED TAX PENALTY (New Rules) Individuals who are required to pay their income taxes on a quarterly quarter-ly basis have new rules for 1 985. These rules were part of the Tax Reform Act of 1984 and become effective January 1, 1985. The most significant benefit to the taxpayer is the new method by which underpayments of estimated taxes will be computed. Underthe old law, you could avoid being penalized if you met one of four exceptions ex-ceptions to the penalty. If, however, you missed all of these tests, your penalty was calculated on the full "balance due" on your tax return. To see how this worked, let's suppose that your 1983 tax liability was $12,000. On your accountant's suggestion you set your 1984 estimates at $12,000 in order to meet the penalty exception that requires you to pay in 1 00 of your prior year's tax liability. After three installments, you decided that you had paid in enough, so your total estimates paid were $9,000. When your 1 984 return is prepared, your total tax liability, much to your surprise, comes out to $25,000. Since you have failed to meet the "1 00 of the prior year's taxes test," the penalty will be assessed on 116,000, the difference between the $25,000 total liability and the $9,000 actually paid. Under the new law, your penalty would be based on the shortage between what you actually paid ($9,000) and what you should have paid using the 1 00 of the prior year test ($ 1 2,000). In other words, your penalty will be based on $3,000, not $ 1 6,000. This change in the lawcan be very beneficial to individuals who have large fluctuations in their annual income. It's wise to have professional assistance in planning your quarterly payments. Since you get penalized for underpaying and since the government does not pay interest on excess money prepaid, it makes sense to plan your payments. 550 MAIN STREET, PARK CITY, UT 645-7390 445 EAST 4500 SOUTH, SLC, UT 261 -3459 cs mm QUALITY SERVICE DEPENDABILITY, SATELLITE SYSTEM ULTIMATE SATELLITE SYSTEM V 10" TOP OF THE LINE MESH DISH AFFORDABLE SATELLITE LUXOR REMOTE CONTROLLED SYSTEM SYSTEM UNIDEN10O ACTUATOR COMPUTER 8 FT. SATELLITE DISH CONTROLLED 100 LNA STATE OF THE ART ELECTRONICS CABLE INSTALLATION & WEATHERIZED RECEIVES ALL AVAILABLE . CAN BE ADAPTED TO USE CHANNELS REMOTE CONTROL IN ALL ROOMS Serving Park City for over 7 years Park City Business License 001080 I'gjEMdUuifc ikV&AUIdKo) mic I 1 140 LAST BRICKYARD PLAZA "9 SALT LAKE CITY UTAH 84)08 rv 801 -485-7555 v We pride ourselves on quality installation, service and dependability! mWi ff k Day. Not red hearts and Ml ' '' 1 H chocolates again . . . m lf 1 I Fill your Valentine's heart with fjr I a gift of love from DREAMS. "wupy -mi Ivory lace front gown $30 W' Burgundy gown with lace accents $30 363-2135 "Second Level - '; '' rGKalet Apresr S f . a i &c (r4;C7ine Salon Gr I 64-9-4-335 "We'll Pamper you Outrageously" $ Complete Hair Care FREE Cp, I Manicure MANICURE f X Waxing 'i? Massage WITH THIS AO Facials -AND A HAIRSTYLE o-t---'3 .H tho I'.nk CHy Ski Area. MiJ,t. t.vc. Wit 'if" |