1040-ES Payment Vouchers or more W-4 withholding?

[meres]

After filing my 2024 taxes with TurboTax, it also generated some 1040-ES payment vouchers for 2025 since I owed so much more than my withholding accounted for in 2024. I'm single w/ no dependents and have a FT job w/ a W2. I did have extra income in 2024 from selling some stock and a HYSA so I knew I'd owe some in 2024, but it was way more than I thought. Each quarterly 1040-ES voucher is $938 and I did not file the first one due 4/15... so my question is: should I file the next three quarterly vouchers or could I just have extra withheld from my paychecks to account for the $938x4 vouchers? I expect to have a little less extra income in 2025 than I did in 2024 as well. Thanks!

[mbpeddie]

As a W2 employee , you are not required to make quarterly estimated payments. You can increase your withholding by submitting a new W4 to you employer.

TurboTax has a W4 calculator and you can enter your information and estimate how much tax you should withhold . It will create a new W4 for you to give your employer.

Here is the link to our W4 calculator:W-4 Calculator

Mary, tax expert

[baldietax]

You might not need to pay that much ES/withholding.  To avoid penalty you need to pay thru withholding or timely estimated tax, the smaller of either 100% of your 2024 tax (110% if AGI > 150k but I'll just refer to 100% here) or 90% of your 2025 tax.  When you do your 2024 return, TT by default generates ES vouchers based on 100% of 2024 tax and assumes your 2025 withholding is the same as 2024.  If your 2024 tax was higher due to cap gains etc and you expect less income in 2025, it may be that "90% of 2025 tax" is smaller amount.  In TT under Other Tax Situations / Form W4 and Estimated Taxes you can provide estimates for 2025 which may trigger smaller ES vouchers.  If you are on TT desktop you can go to Forms mode there is a form "Est Tax Options" which shows the calculation.

The benefit of using "100% of 2024 tax" is everything is known and fixed in that calculation by April 15th in time for the Q1 ES payment, and it doesn't matter whether you get unexpected income in 2025, as long as you pay those amounts on time you will not have a penalty.  The disadvantage of this method can be an overpayment if your income is generally flat or lower in 2025.  The disadvantage of the "90% of 2025 tax" method is you need to estimate 2025 and keep track that your payments are sufficient.

That said to your question, if you have W2 income you can cover the estimated tax with withholding instead, bearing in mind you only have 7 months left to adjust for it and it could take 1-2 pay cycles to take effect.  One benefit of using withholding is that it's always considered "timely" even if it is withheld later in the year so it doesn't matter that you missed the Q1 ES payment, whereas ES need to paid quarterly in general (unless you have some one-off income you can file the Annualized Income method on Form 2210 to show the uneven timing of the income and ES payments).  If you go the ES route, since you missed the Q1 ES you will have some penalty for Q1 on that amount, but only for a few months provided you pay 50% of the total ES in Q2 to stop the Q1 penalty from accruing further, then pay 25% each in Q3 and Q4.