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atatarokh
Level 3

Any obligation to pay 1040ES when there is a Change in situation?

I am on W-2 and my employer withholds federal and state taxes on every paycheck.

I sold a big sum amount of stocks and crypto last year. So the amount of tax I owed for the year of 2021 was significantly high. Turbotax generated 1040-es for me. I made my first payment, but for the payment of June 15th, I am thinking why I should pay since tax is already withhold by my employer.

I am not planning to sell much asset this year, since stock/crypto markets are significantly down.

 

Do I have any obligation to pay since 1040-es was already generated and reported to IRS when I filed my 2021 taxes? What if I decide not to pay but until the end of the year my income increase because of some other reasons (not selling assets) like switching to a higher paying job?

1 Best answer

Accepted Solutions
NCperson
Level 15

Any obligation to pay 1040ES when there is a Change in situation?

@atatarokh - there is no obligation to pay the estimate.  it was NOT reported to the IRS.... the vouchers were created as a convenience.  You can pay a different amount or not pay it at all, based on your 2022 tax situation.  

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2 Replies
NCperson
Level 15

Any obligation to pay 1040ES when there is a Change in situation?

@atatarokh - there is no obligation to pay the estimate.  it was NOT reported to the IRS.... the vouchers were created as a convenience.  You can pay a different amount or not pay it at all, based on your 2022 tax situation.  

Mike9241
Level 15

Any obligation to pay 1040ES when there is a Change in situation?

like others have pointed out there is no requirement to pay estimated taxes. since it seems your 2022 tax will be lower than your 2021 tax, you avoid penalties by having withholding and timely estimated tax payments that equal or exceed 90% of your 2022 tax or your 2022 tax less withholding is less than $1000 

 

if your 2022 tax will be higher than 2021 you'll need to cover by withholding and timely estimated tax payments 100% of your 2021 tax (110% if your 2021 Adjusted gross income id over $150,000).

 

with irregular income, you can use the annualized installment method to reduce or eliminate penalties.  this can be difficult to use because you need good records to determine your actual income/deductions  for each installment period and then you also need to compute any extra taxes or credits for each period,

 

 

here are links to the form and instructions.

https://www.irs.gov/site-index-search?search=2210&field_pup_historical_1=1&field_pup_historical=1 

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