1. In my case, do I still have to pay the interests for the months prior to August? My understanding is IRS averages the total taxes I pay in a year. There is no penalty and if you pay the balance due by 4/15/21 there is no interest either.
2. What is the difference between 'increasing the W2 withholding' and 'paying estimated tax in the 4th quarter"? These two approaches both can help me pay 110% tax of last year to take advantage of safe harbor for 2020 tax year. I assume IRS just checks the entire tax you pay in 2020 and wouldn't differentiate the paid taxes are from withholding or estimated tax payment? There is no difference to the IRS ... both ways pays the taxes in advance it is just where the payment comes from. To you the difference is in the fact you don't need to bother with the form 2210 AI at the end of the year since you are using the safe harbor method to pay the taxes in advance.
