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@FrustratedUser yes you need to meet the 'safe harbor' amount of tax paid during the year in a "timely" manner - withholding is always considered "timely" even if it occurs later in the year, whereas estimated taxes need to paid on a quarterly basis by default.  (there is another option to use the 'annualized income' method on Form 2210 if you have uneven income e.g. Roth conversion or large cap gain in Q4 and need to make a one-off ES payment, but if your income is evenly earned thru the year this method won't help eliminate the penalty).   the IRS by default assumes your income and withholding happen evenly thru the year, these annual totals are divided into 4, whereas estimated tax have specific dates that need to line up with that by quarter.  you are correct the penalty calculation is done on a quarterly basis, you need to meet 25% of your safe harbor amount by Q1 etc.  Overpayment in a quarter later in the year cannot make up for an underpayment earlier in the year, but will stop the penalty interest accruing once you make up the underpayment balance as soon as possible.  Overpayment earlier in the year will apply to underpayment in later quarters.  So if you miss Q1 ES for example, you should pay 50% of the total ES in Q2 to stop the penalty from accruing and would pay a penalty on the Q1 ES for a few months not the whole year.   in terms of how much to pay - @Cindy4  outlined the safe harbor amount you need to meet.  TT by default will generate ES vouchers based on 100% of your 2024 tax (110% if AGI > 150k) and assumes your 2025 withholding will be the same as 2024.  In Other Tax Situations/Form W4 and Estimated Taxes you can provide estimates for 2025 to see if 90% of 2025 tax option is more advantageous.  The benefit of paying ES based on 2024 tax is that is known/fixed by April 15th so it doesn't matter what your 2025 income/tax is in this calculation - but beware if your 2025 withholding doesn't meet the 2024 number then the ES will not be enough so keep eye on the withholding amount being assumed.  The downside of using 2024 is it can result in overpayment if your income/tax is flat or lower in 2025.  The downside of using 90% of 2025 is you need to estimate this and keep eye that your ES is making the 2025 amount.   Agree if you use withholding in 2025 you only have 6 months or so left to close the gap.  You could still increase withholding now to reduce the amount of ES needed and still pay some smaller ES if you still need to make up the difference.  If you didn't pay Q1 ES you will likely have a penalty for that and to minimize that you should pay 50% of the total ES you need to meet in Q2 to stop the penalty.  Reducing the ES by increasing withholding will also reduce the penalty, as it will reduce the final determination of how much ES you needed to pay in Q1.   Best place to start is to double-check the ES calculations by figuring out your 'safe harbor' amount that you need to hit in total, subtract projected 2025 withholding from that and divide the result by 4.   More info estimated tax - https://www.irs.gov/faqs/estimated-tax Links to Form 2210 - https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty   Not a CPA just my 2 cents, hope this helps.

If you owed due to the interest on your Hight Yield Savings Account and you know you will have that income again, then I would suggest you have your employer withhold a little more from your paycheck.  Technically, you could make estimated payments instead, but you will feel it less if you just increase your paycheck withholdings!   If you are going the paycheck route, you'll submit a new W-4 form to your employer.  You can take the amount you owed last year and divide it by the number of paychecks left for this year to see how much additional should be withheld each check and fill that number in on question 4C of the W-4 form.  (This assumes your interest income will be around the same.  Increase or decrease based on your numbers.)   Alternatively, you can fill in the amount of the additional income you want taxed on line 4A of the W4 form.  Either way will get more withheld from your paycheck for that interest.     I think that's your best bet to solve the problem without having to make 3 large estimated payment checks!  (Using $1500 for example, that would be 3 payments of $500 each (since there are 3 quarterly estimated payments left for 2025) as opposed to $107 per paycheck additional deduction assuming you have 14 biweekly paychecks left.)  Of course, you should do what works best for you financially!   **Please say "Thanks" by clicking the thumbs up icon in a post ***Mark the post that answers your question by clicking on the "Mark as Best Answer"

Since the W-4 form no longer uses "allowances," the way to ensure the highest amount of federal tax is withheld is to effectively tell your employer to withhold as if you have minimal deductions or credits. Here's how to do it on the current W-4 form: Step 1 (Personal Information): Select your correct filing status (e.g., Single, Married Filing Jointly).   Steps 2 & 3 (Multiple Jobs & Dependents/Credits): Leave Step 2 blank. This ensures that the withholding for your job isn't adjusted downward for potential multiple jobs or a working spouse. Leave Step 3 (Claim Dependents and Other Credits) blank. By not claiming any child tax credit or other credits, you're telling your employer not to reduce your withholding for these benefits, leading to more tax being taken out. Step 4(c) (Extra Withholding): This is the most direct way to maximize withholding. Enter a specific dollar amount you want withheld in addition to the standard calculation each paycheck. For example, if you want an extra $100 per paycheck withheld, write "$100" on line 4(c). You can make this amount as high as you want. In summary, to maximize federal tax withholding: Fill out Step 1 with your correct filing status. Leave Steps 2 and 3 blank. Enter a substantial dollar amount in Step 4(c) to request additional withholding each pay period.   **Important to Note IRS Tax Withholding Estimator: While you're aiming for the highest withholding, it's still highly recommended to use the IRS Tax Withholding Estimator (www.irs.gov/individuals/tax-withholding-estimator). This tool can help you determine how much extra you should put in Step 4(c) to reach your desired level of withholding without significantly overpaying throughout the year.   Large Refund vs. More Take-Home Pay: Maxing out your withholding means you'll have less take-home pay throughout the year but will likely receive a larger tax refund. Consider your personal cash flow needs. Review Regularly: You can update your W-4 at any time by submitting a new form to your employer. If you find you're withholding too much or too little, you can adjust it. Helpful Links: 5 Ways to Boost Your Tax Refund  Form W4 and your Take Home Pay TurboTax  What is a W4 Form? TurboTax  W4 Calculator TurboTax  IRS Withholding Estimator  Please feel free to reach backout with any additional questions or concerns you might have! Thank you for joining us today and have an amazing rest of your day!   **Say "Thanks" by clicking the thumb icon in a post **Mark the post that answers your question by clicking on "Mark as Best Answer.”