This is a difficult question to fully answer. The estimated tax vouchers if paid on time generally allow you to avoid the imposition of an estimated tax penalty.
The estimated tax penalty is calculated based on the tax shown on your original return or on a more recent return that you filed on or before the due date. The tax shown on the return is your total tax minus your total refundable credits.
The IRS calculates the penalty based on:
- The amount of the underpayment
- The period when the underpayment was due and underpaid
- The interest rate for underpayments that is published quarterly
The IRS will not charge you an underpayment penalty if: You pay at least 90% of the tax you owe for the current year, or 100% of the tax you owed for the previous tax year (110 percent for AGIs greater than $75,000 for single and separate filers and $150,000 for married filing joint), you most likely will not need to make estimated tax payments.), or you owe less than $1,000 in tax after subtracting withholdings and credits.
While you overpaid by three and five times more in the second, third and will in the fourth quarter, you may still owe a penalty. If your income can be annualized, I would do that as well to reduce any penalty. Once the 2024 Turbo Tax is available you can go into Other Tax Situations and calculate the penalty.
Thank you for the opportunity to answer your questions @kamull01
All the best,
Marc T.
TurboTax Live Tax Expert
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