My income was $288,000 in 2022. I am scheduled to pay $20,000 in estimated taxes. I am only making $110,000 this year. Do I need to pay the estimated taxes?

Forum|Forum|3 years ago
August 21, 2023
3 replies
29 views

I will be due a refund.

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DoninGA

Level 15

See this IRS Tax Topic for Underpayment of Estimated Taxes penalty to see if you need to pay estimated taxes for the 2023 tax return - https://www.irs.gov/taxtopics/tc306

Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.

fanfare

Level 15

IRS requires you to estimate your tax and pay as you go.

Since you are making less this year,

your estimated tax + withholding must add up to at least 90% of your 2023 tax.

You can still be penalized for underwithholding in a quarter if your four payments are not approximately equal i.e. 25% of 90%.

In that case, see Form 2210 for other calculation that might reduce your penalty.

@cyclecheese

NCperson

Level 15

the estimate forms that TT created as part of your 2022 tax return is an estimate only. You have no obligation to pay that amount. Pay the number (if anything) that you think is required.