Thanks. Now, I understand. And I think you understand the situation.
I'll summarize:
You can read about the underpayment of estimated tax penalty and how to avoid it here:
https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty
"To avoid a penalty, pay your correct estimated taxes on time. Find how to figure and pay estimated taxes.
You may avoid the Underpayment of Estimated Tax by Individuals Penalty if:
- Your filed tax return shows you owe less than $1,000 or
- You paid at least 90% of the tax shown on the return for the taxable year or 100% of the tax shown on the return for the prior year, whichever amount is less.
Thus, if you expect your 2022 income to be significantly less than 2021, you can be very safe, and pay 100% of the tax shown on the return for the prior year (2021). This would likely result in a large refund for your 2022 tax return. You said you want to avoid this.
To be more accurate with your 2022 estimated taxes will require performing the estimated tax calculations quarterly, which I discussed in my previous post.
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