Let’s assume that my day job will yield an equal amount of wage income (approx. $53,000) and federal taxes withheld (approx. $5,000) in 2020 as it did in 2019. I still had $2500 in taxes due in my 2019 return as a result of additional income through mutual fund dividends. My total tax liability in 2019 was $7,500 ($5000 + $2500).
I am certain that in 2020 my additional income will be significantly higher than last year and, as such, my 2020 taxes owed will greatly exceed $2500 in 2020.
Can I just pay one estimated tax payment in Q1 for $2,500 and avoid additional quarterly estimated tax payments for 2020 since I would be having 2020 taxes withheld from my paycheck (of at least $5,000) and this one 2020 estimated tax payment of $2,500 would result in having paid at least 100% of my prior year’s total tax liability? Would this accomplish “safe harbor “? Of course I would be making sure that I have enough money next April to fully pay what I owe, but I want to earn interest on this additional income and I would like to avoid the hassle of having to pay four quarterly payments that are really just estimates anyway. The key is I will pay the taxes due but I want to avoid any penalty.
