Yep...the initial default calculation that is used, but both the IRS and TTX , does not take into consideration when the $$ were actually taken out, and thus, any large withdrawals gets spread over the entire 4 quarters, perhaps resulting in underpaid taxes for the first couple quarters (default calc only)......this happens especially if the extra income happened later (large mutual fund distributions happen in Dec too that, by default, get spread over the whole year). None of your tax forms from the providers actually indicate when the $$ were distributed (other than a 1099-B/8949 for stock transactions).
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Yes, TTX and the IRS do have a way for you to minimize of reduce the penalty ahead of actually filing. There's an Underpayment Penalty menu item on the "Other Tax Situations" page of the federal Q&A section
to fill out the Annualized Income forms (form 2210/AI)....but that requires you to collect a lot of detailed information about exactly when you received all your income by "quarter" (3mo, 2mo,3mo,4mo), and other details too about tax withholding and exactly when your estimated tax payments were made relative to those income items. (I'd never bother for a penalty less than ~$50)
IF you received the excess income in the first one or 2 quarters of 2022, for which you did not pre-pay sufficient taxes during those quarters, there is not likely to be much of a reduction in the penalties or interest assessed......but that really depends on each person's exact situation. But if you did pay estimated taxes to pay for that income..in the same quarter, then the penalty would likely be reduced or eliminated....but Like I said, it takes a long session gathering all the pertinent information.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
