huilam1942,
While your post is extremely terse, I presume you have found you owe CA more than $500 and are facing underpayment penalties and interest. First of all, if you were a full year resident of CA in 2021, there is a safe harbor provision capping the amount you had to fork over during 2022 in order to avoid penalties and interest no matter how much you owe this time around. (If you were not a full year resident for 2022, then you aren't subject to the interest and penalties.) Basically it says that if your paycheck and similar tax withholdings added up to either at least 90% of the CA tax this year or 100% of the CA tax on your 2021 return (line 65 on the 2021 form 540), you are OK. (If your 2021 income was more than $150K, change the 100% to 110%.) Additional details for this are at https://www.ftb.ca.gov/forms/2022/2022-540-es-instructions.html .
OK, next I will assume that you didn't meet the safe harbor criteria for 2022. (Form 5805 does first check this.) In this case, Form 5805 gives you the opportunity to lower or possible even eliminate the underpayment penalty and interest in the event that your income stream during 2022 was uneven and, in particular, was a good deal smaller in the earlier parts of the year than during the latter parts. To do this, you need to work through the Annualize Income (AI) portion of the form. This is a royal pain to complete in that you need to go over all your income items, credits and deductions and sort them into four date ranges: Jan-Mar, Apr-May, Jun-Aug, and Sep-Dec. Should your income have increased during the year, this lets you bank over-withholding earlier in the year and apply it against under-withholding later in the year. As underpayment interest is calculated from the point of underpayment to the date the tax is paid, this will generally reduce the amount of interest you will owe by delaying the start dates and the amounts on which interest is calculated.
So, the questions to answer are: (a) was your income uneven and generally larger as 2022 progressed? (b) do you have sufficient records to divide up your income, credits and deductions into the four date ranges? and (c) do you have the time and energy to do so, effectively doing four trial tax returns, to save what is usually a penalty of less than $100 and often in the $20 range?
Looking to the future, there are some well-defined ways to avoid this situation:
(A) If the majority of your income is from paychecks, you could simply take the underpayment amount, divide it by the number of paychecks you receive during the year, e.g. 26 if paid biweekly, and file an new W-4 with payroll asking for that additional amount to be taken from each paycheck for CA taxes. (You can do a similar arrangement if your income is mostly from retirement pension, annuity and social security.)
(B) On the other hand, if a good deal of your income is from sources such as stock market investments, you will need to start paying quarterly estimated taxes. Google "2023 CA Form 540-ES site:ftb.ca.gov" to find the form and instructions on how this is done. TurboTax will suggest doing this and will walk you through this in the CA state section.
Finally, you should also check to see if you are risking underpaying the IRS by more than $1,000. If so, the same options exist to avoid having to deal with IRS Form 2210, the equivalent of CA Form 5805.
