You all gave me coupons to make estimated income taxes. Do I need to use them? My taxes are kept out
I cashed in a 401K which resulted in me owing state and local taxes. Normally my state/local taxes are kept out of my paycheck and are over what is necessary. If I use these coupons, I am going to overpay this year big time.
The program produces these forms as a convenience for you to make the payments. You are not locked into those payments. The program will produce them automatically if you owed tax as the government requires you to withhold enough tax to cover your tax liability or make estimated tax payments. If you don't have enough withholding and you don't make estimated tax payments, then the IRS can charge you with an underpayment penalty.
If you owed tax this year because of a one-time event like a 401k cash in and you won't owe next year, then you can decline to send any payments. You can also decline to send the payments even if you will owe tax next year, but you may be assessed an underpayment penalty. You can view more information about this penalty at the link below.
