Yes, you could be subject to estimated tax penalties to the IRS if you expect to owe tax of $1,000 or if you paid 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. or more when your return is filed.
There are exceptions to this rule if you meet all three of the following conditions.
- You had no tax liability for the prior year
- You were a U.S. citizen or resident for the whole year
- Your prior tax year covered a 12-month period
You had no tax liability for the prior year if your total tax was zero or you didn’t have to file an income tax return. Tax liability amounts are shown on Line 24 of your 1040 in 2020. If there is an amount shown on line 24, then you do not meet the condition for the exception.
For the State of California, you must pay estimated taxes if you expect to owe at least"
- $500
- $250 if married/RDP filing separately
And, you expect your withholding and credits to be less than the smaller of one of the following:
- 90% of the current year’s tax
- 100% of the prior year’s tax (including alternative minimum tax)"
My advice is to make an estimated tax payment by January 15 to avoid penalties that may occur. You can do this by going to your 2020 Turbo Tax Program and:
- With your return open, go to federal
- Go to uncommon tax situations
- Scroll to Other Tax Forms
- Form W-4 and Estimated Taxes
- For CA, as you prepare your return, you will reach a page that says "A few things before we wrap up your state taxes" Go to other forms>estimated taxes for next year>start. As you go through the questions, you will wish to pick the January date in 2022. Remember, you need to be in the 2020 return to access this feature.
It may be easier to download an payment voucher for both the Federal and California State return instead of trying to do this through Turbo Tax. Here is a link for a payment voucher for 1/18/22 on page 9 for the federal Government. Print that page and tear off the voucher to send in. You may get the Ca estimated tax form at this link. Print the voucher that says 1/22/2022.
The penalties for not paying estimated taxes may vary. This link may give you an idea on how much of a penalty that may incur in your federal taxes. Also this State of California link states that your penalty is 3% underpayment penalty.
[ Edited 12/29/21| 04:53 PM PST]
@jawckey
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
