Avoid Quarterly Underpayment Penalty

andrew_johansen · ‎May 7, 2021

For the 1040-es, your total tax payments must add up to the lesser of these two amounts:

90 percent of the tax you estimated that you will owe for the current year, or
100 percent of the tax you owed for last year

Can I use a really small AGI on the 1040-ES so that my quarterly tax payments are low?

In doing that, I'm trying to avoid high quarterly payments that I won't be able to afford if my business is having a very slow season so that I don't get hit with the quarterly underpayment penalty.

Mike9241 · ‎May 8, 2021

yes you can, but you run the risk of estimated tax penalties. if your business is seasonal so that most of your income will be received later in the year, you can pay lower estimates at first and increase them if income picks up. by the way, the first estimate was due 4/15/2021,

the next is due 6/15, then 9/15, the 1/18/2022

when you are doing the 2021 return, you may be able to use the annualized income method (form 2210) to minimize or eliminate any penalties.