I'm in a California disaster area, so 1st 3 payments are due Oct. 16. Perhaps I don't understand annualized, but since I have minimal due 1, 2, and 4th payment, wouldn't annualized have me paying more Oct 16 than if I were to divide the yearly amount by 4? I understand how annualized can help you if you make less in the beginning of the year, but don't quite understand if it's in the 3rd quarter.
Perhaps you can describe with an example? Let's say until Aug 31, 2023, my CA tax liability is 100k and I estimate by Dec 31, 2023 the CA tax liability will be 110k. If I don't do annualized, by Oct 16, 2023, I would pay $69,300 by Oct 16, $29,700 by 1/15/24, 10% balance by 4/15/24. But if I annualize, wouldn't I be paying more?
Not sure I can get the annualization right doing it manually as I've not done it before. If I will get penalized for just paying 70% of the 90% required (CA requires 30% 1st payment, 40% 2nd, none for 3rd), will 90% of the tax accured by 8/31/23, in this case 81k suffice? I don't have to do 90% of the yearly amount by 10/16/23, right (89.1k)?
I prefer to pay less upfront, but also am trying to avoid underpayment. @Anonymous_ @TomD8 Could you explain how annualization works in your favor if most of the gain (and tax liability) happens in the 3rd quarter? Also still wondering if annualization is required in this instance. Thanks for your expertise.
