Hi,
I've seen information on bits and pieces of my situation and think I know the answer but would appreciate help / clarification.
I was a W-2 employee for all of 2019 and received a refund, therefore had no estimated taxes required to pay in 2020.
I was a W-2 employee for part of 2020 (laid off in May).
I did receive unemployment in 2020 and recently (Sep 15) started a 1099 job that I am still working at. I have not paid any estimated taxes on the 1099 income yet as honestly I thought some other fulltime jobs would come through before now. However the 1099 job is going well and I expect to be brought on-board early in 2021 (maybe March) as a W2 employee.
I know I owe taxes on the unemployment and the 1099 amount for 2020.
My understanding from helping others with their taxes (they are 1099's for the entire year) that they pay quarterly taxes, with the final / last payment of the tax year being due on Jan 15 of the calendar year after the tax year (e.g. final estimated quarterly tax payment for 2020 is January 15, 2021).
Since I expect my job to be converted to a W2 in 2021, I don't want to be saddled with an extremely large quarterly payment being expected from the short term situation in 2020.
I think that I have 2 scenarios:
1) I just file my taxes like I normally do, in 2021, without making an estimated payment for the 1099 and unemployment income and just have a large tax bill in April of 2021.
2) Sometime before January 15, 2021, I make a reasonable estimated payment towards what I think I will owe (based on doing my preliminary return in TurboTax; I won't have all the information I will need by Jan 15 to fully do and file my return).
Here is my question (or questions). in #1 above, will I have a penalty because I didn't make any estimated taxes on the untaxed income?
I guess same applies to #2, if my "estimated" payment is insufficient, would I owe a penalty on top of what I pay when I file my taxes by April 15? Or is there no penalty in either scenario because in 2019 I was a fulltime w-2 employee and no quarterly estimated payments required during the first 1/2 of 2020? The benefit I see of #2, even if there is no interest or penalty due, I would significantly decrease the automatic calculation of my 2021 quarterly payments.
Oh, and if my Date of Jan 15 above is incorrect (i.e. I need to make a payment by Dec 31, 2020 for it to count) please let me know.
Thank you in advance and sorry in advance for any over-complications I've created in my question.
Remo.
