Accepted Answer

Hello XXXXXXXX,

When you receive SS benefits, you are only allowed to have a certain amount of other income each year before part of your SS benefits become taxable. Because of the income you will have from royalties and short term gains, this is going to make 85% of your SS benefits also subject to tax, or a total of $12,750.

With your royalties of $35,000 and short term gains of $20,000 and the taxable SS of $12,750, this gives you adjusted gross income of $67,750 for the year. After applying your standard deduction and one personal allowance, you would have taxable income of $57,000 for the year. Your federal tax on this amount will be $10,437.

If you have not paid in any taxes for the year to cover this amount that will be due, then when you file your return you are also going to owe some interest and penalties for the underpayment of tax. You can go ahead now and submit an estimated tax payment to the IRS for any amount you wish. This will not eliminate all of the interest or penalties you may owe, but it will reduce them if you pay some or all of these taxes now, rather than waiting until early 2010 when you file your return.

Estimated tax payments are made by filling out Form 1040-ES and submitting that voucher with your payment to the IRS.

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Thank you biggie and let me know if you have more questions. I am happy to help you with whatever I can.

Expert:	Merlo
Pos. Feedback:	99.8 %
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Answered:	10/27/2009

Accountant

25+ years tax consulting. Specializing in returns for US citizens living abroad