What Triggers Underpayment of Estimated Taxes

[patmac59]

Hi,

This is for New York State taxes.

What triggers "Underpayment Of Estimated Tax By Individuals and Fiduciaries?

I've never estimated my taxes and I can't see in TT why this form printed out. Also 4 Estimated Payment Vouchers For Individuals for 2021 printed out as well.

My 2020 New York Tax Return Summary says: Payment Due $392...I get that, then a Penalty/Interest  of $7.

Also in the bottom Box of the Summary page is a schedule for four vouchers to be paid in 2021...saying this is my New York Estimated Payment Vouchers for 2021?

Why did this happen? I was just going to have the money I owe for 2020 taken out of my account.

Any insight would be helpful and appreciated.

Thanks for your time.

[LenaH]

Generally you must pay estimated income tax for the next tax year if you expect to owe, after subtracting your withholding, at least $300 of either New York State, New York City, or Yonkers tax for 2021. Since you owe $392 for 2020, TurboTax created the NYS estimates because the program uses the most recent information when determining if you need to pay estimated tax payments. 

To avoid a penalty in 2021, you must pay New York State:

• 90% of the tax shown on your 2021 return or
• 100% of the tax shown on your 2020 return 

Please see Form IT-2105 Instructions for more information. 

[patmac59]

Thanks, this helps.

But I'm still confused about something.....the four payments of $98 being paid in 2021 are for 2021, or for 2020?

I selected to have the $392 owed to the state(NY)  for 2020 to be taken out of my bank account...??

So, I'm still a bit confused.

Thank you for your time.

[DawnC]

You can go ahead and pay the amount due from your bank account as you have made plans to do.   Because you owed taxes this year, TurboTax included the vouchers to avoid owing again next year.   The vouchers are for 2021 and you are not required to use them.   

You may get these vouchers if you're self-employed or had an uncharacteristic spike in your income this year. For example, you sold stock, received unemployment, or took a large distribution from your retirement plan.   You're not required to make estimated tax payments; we're just suggesting it based on the info in your return. If you feel they're not needed for next year's taxes, you can shred them.

[patmac59]

One more pain in the butt question....

How do I drill backwards in TT to make sure I set things up to take the money I owe out of my account?

I realize I can wait and see.....

Thanks for your time.

[AmyC]

When you go through the step titled FILE, you will have the option of how to pay your 2020 state taxes.

For 2021, if you have a w2 job, you can have them withhold more taxes to cover side jobs, investment income or whatever else caused the balance due. If you don't have a w2 job, you will want to send estimated payments in.