If you expect to owe more than $1,000 in federal taxes for the tax year, you may need to make estimated quarterly tax payments using Form 1040-ES, or else face a penalty for underpayment. You could also have withholding taken from the larger winnings if it isn't already being done.
If your federal income tax withholding (plus any timely estimated taxes you paid) amounts to at least 90 percent of the total tax that you will owe for this tax year, or at least 100 percent of the total tax on your previous year's return (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.
See this TurboTax tips article for more information.
Taxpayers have the option to prepare estimated tax forms 1040-ES and complete the amounts. The IRS does not prepare them, though they have some good resources for estimating taxes due (see here for more information). In TurboTax, visit Form W-4 and Estimated Taxes under Other Tax Situations to prepare quarterly estimates or prepare a Form W-4.
If you have an underpayment penalty on your return, visit or revisit the Other Tax Situations section and review the Underpayment Penalty information to confirm it is correct. Go through the interview and follow the prompts; when you get to the Penalty Waivers screen, answer "yes" if you qualify for a disaster exception, then "yes" at the next screen to request a waiver of the penalty, in all or part. Enter the reason in the field provided.
If your federal income tax withholding (plus any timely estimated taxes you paid) amounts to at least 90 percent of the total tax that you will owe for this tax year, or at least 100 percent of the total tax on your previous year's return (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.
See this TurboTax tips article for more information.
The IRS may reduce an underpayment penalty if any of the following apply:
The penalty for underpayment of estimated tax can also be removed to the extent that the underpayment is the result of a casualty, local disaster, or other unusual circumstance such that it would not be fair to impose the penalty.
See here for information about different TurboTax tools you can use to calculate withholding and estimated taxes.
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