1040-ES: High estimated taxes due to one-time income

[jigness]

In 2019, my employer went from a public company to private, causing 10+ years of RSUs to be paid out at once. This created a large tax liability in 2019. We adjusted cost basis and paid the owed tax.

We have been making quarterly 1040-ES estimated tax payments for the past few years. However, because of this one time 2019 situation, our 2020 estimated taxes amount is 4x more than it was in prior years. One quarter's estimate in 2020 is more than all 4 of the 2019 quarterly estimates combined!

Since this was a one-time event, we will not be receiving such income in 2020; and frankly, we will not be able to afford paying that much tax throughout the year.

Can we pay estimated taxes based on what we think we will owe for 2020 (e.g., our 2019 estimates + a little more for cushion)?

Is there a worksheet we can use to calculate our 2020 taxes?

Is there a formal way to request the IRS to adjust these estimated payments?

[DawnC]

Yes!  You may get these vouchers if you're self-employed or had an uncharacteristic spike in your income this year. For example, you sold stock or took a large distribution from your retirement plan.

You're not required to make estimated tax payments; we're just suggesting it based on the info in your return. If you feel they're not needed for next year's taxes, you can shred them.