Aside from paying a penalty, are there any downsides to NOT doing taxes quarterly, just every April?

[SyberKnight]

we don't make a lot, and doing taxes every year is a nightmare - tho Quicken & TurboTax does make it a little less painful. i've never done the quarterly thing. to me, it seems not very ethical by the government. i feel i should just need to pay my taxes once per year. so i pay the penalty each year because of that decision. i just can't wrap my head around doing it every 3 months, much less the time it would take! so aside from that, are there any negatives i need to be aware of?

[VolvoGirl]

Well you already know about paying the underpayment penalty.  Because you are suppose to pay your tax evenly during the year or as you earn it.   If you were a W2 employee they would take taxes out of each paycheck.  

You must make quarterly estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:
90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

[marctu]

Well I am happy that Intuit make it easier for you.  Ethics brings back memories of philosophy, so I am also going to leave that alone.  

If you are comfortable paying the penalty, I am not going to talk you out of it.  With that said, I personally feel the biggest negative is cash management or cash flow.  Having to make a large payment once a year can cause financial stress, and if the payment cannot be made, either at all or in full, additional penalties and interest will accrue.  Budgeting a smaller payment four times a year is a better budgeting tool, which means that you can use your hard earned money better during the course of the year.

Thank you so much for your question @SyberKnight and I will now try and forget about philosophy course from some time ago!

Be well and safe!

Marc T.

Turbo Tax Expert

27 Years of Experience Helping Client

[SyberKnight]

well,,, that actually makes sense. it is a bit difficult to pay the whole amount come April.

so, i've been trying to find in TurboTax, how to do these quarterly payments and am having trouble figuring that out. does TT not help me with the quarterlies like it does with the yearly?

looks like it has "Form 1040-ES vouchers" to print & mail in myself.

 - what is a "voucher"?

 - can't i make the payments directly inside TT like i do annually?

also, i found the deadline dates. i'm assuming the April one is the same as my annual taxes i do each year, right? or do i ALSO have to make an est pymt separate & at the same time in April?

thanks for the assistance.

[VolvoGirl]

Turbo Tax can prepare the 1040ES slips (voucher and slips are payment papers you mail in with a check.   Turbo Tax can't send the quarterly estimated payments for you. But you can pay the IRS directly online.  Be sure to pick 2024 1040ES payment
https://www.irs.gov/payments

The first payment is due April 15 but it is not the same as any tax due with your current tax return.  So you have to pay it separately.  Like on April 15, 2024 you paid your 2023 Tax Due and need to pay the 2024 first quarter estimate.  Payments for 2 different years.  

The four 1040ES quarterly estimates are due
April 15, 2024
June 17, 2024
Sept 16, 2024
Jan 15, 2025
Your state will also have their own estimate forms.

How to make the Estimated payments
https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875

[SyberKnight]

ok, thank you.

last question - to avoid the penalty, do i have to make all 4 estimated payments or would 3 suffice?