They certainly could; timing is everything. The safe harbor will work for your W-2 income, but if you had high business income in Q1 and did not pay the estimated taxes until Q4, you will likely be penalized for underpayment of taxes. If you meet one of the exceptions, they will waive it. You can generate estimated taxes for next year in TurboTax by following these instructions. There is also an IRS link below.
Underpayment of Estimated Tax by Individuals Penalty
''We (the IRS) calculate the amount of the Underpayment of Estimated Tax by Individuals Penalty based on the tax shown on your original return or on a more recent return that you filed on or before the due date. The tax shown on the return is your total tax minus your total refundable credits.
We calculate the penalty based on:
- The amount of the underpayment
- The period when the underpayment was due and underpaid
- The interest rate for underpayments that we publish quarterly
Pay a Penalty
Send us a payment or pay your estimated taxes in full on time to stop future penalties and interest from adding up.
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