Tax Question

[Holland Hacker]

Originally Posted by Port Conway Lane

Just to update and for those of you who may be as ignorant as I was of the tax laws I was assessed an interest penalty from the state of Maryland for $81 because I did not report the contest winnings. I was required to report those winnings when I received the check and pay the state an estimated tax. This could apply to gambling winnings as well.
Freakin thieves.

Generally speaking estimated taxes are due on taxes and should be equal to 100% (or 150% for High AGI taxpayers) of prior year tax or 90% of your current year tax liability. Assuming you had other income in Maryland in last year and had at least an amount equal to or greater than last years tax paid in through withholodings you shouldn't owe the underpayment penalty. If you didn't file in Maryland in a prior year I'm not sure if you can rely on the prior year safe harbor. You can check the requirments found in the instructions.

Out of curiosity do you live in Maryland? I'm trying to figure out why Maryland is entitled to any tax. What if anything did the terms & conditions of the contest say with respect to taxes?