This topic is unclear to me too. I've always assumed the estimated tax penalty can be avoided by paying 100% of the prior year total tax liability. But TurboTax...and others...assert that the prior year amount reduced by the deferred SE amount will still meet the no-penalty requirement. Afterall, 50% of the SE deferral is to be paid in 2021 by December 31st. But the other half not until 2022. Here's a pasted FAQ from a recent IRS bulletin, which seems to me to be subject to interpretation. It sure would be helpful to get definitive guidance on this topic!
IRS FAQ #22. Is there a penalty for failure to make estimated tax payments for 50 percent of Social Security tax on net earnings from self-employment for the payroll tax deferral period?
No. For any taxable year that includes any part of the payroll tax deferral period, 50 percent of the Social Security tax imposed on net earnings from self-employment attributable to the payroll tax deferral is not used to calculate the installments of estimated tax due under section 6654 of the Internal Revenue Code. This means that self-employed individuals that defer payment of 50 percent of Social Security tax on their net earnings from self-employment attributable to the period beginning on March 27, 2020, and ending on December 31, 2020, may reduce their estimated tax payments by 50 percent of the Social Security tax due for that period.
Can an expert please clarify?
