Are Estimated Payment Vouchers Mandatory

[tuneman01]

TurboTax 2024 generated payment vouchers.  Are they mandatory if I plan to adjust my w-4 through my employer to cover the extra taxes if necessary?  The only reason I got flagged with the vouchers is because I did not withhold enough on an unplanned IRA distribution and didn't calculate my tax liability correctly.  Thanks

[xmasbaby0]

Those 1040ES vouchers are optional to use.   If you expect to owe at least $1000 at tax time next year, using the vouchers or making estimated quarterly payments can help you avoid a big tax bill or an underpayment penalty next year.  You are not required to use them.   Sounds like you are changing your W-4 withholdings instead, so if you want to just toss out the 1040ES vouchers, that is fine.

[MindyB]

No, they are not mandatory- TurboTax provides them based on the information in your return, but if you plan to adjust withholdings, you can ignore them.

Here's some helpful information: Estimated Taxes: How to Determine What to Pay and When

[tuneman01]

I was just checking if the estimate payments were required because I see in the TurboTax "Estimated Taxes" article a statement saying:  "However, you may still owe an underpayment penalty for the first quarter because the first payment wasn't made by the April 15 deadline."  This makes it sound like penalties are assessed if payments aren't made on specified dates.  Even if I'm withholding thru my employer.

[SharonD007]

The federal tax system is a pay as you go system.  As you make money, you have to pay taxes on that money. You may have an underpayment penalty if you didn't have enough taxes withheld from your income throughout the year on your W-2 or if you're self-employed and you didn't pay enough estimated taxes.

For more information, refer to the TurboTax help article Guide to IRS Tax Penalties: How to Avoid or Reduce Them for tips to use in the future.

[tuneman01]

But if I don't have an underpayment situation at the end of the year then I won't have to pay a penalty on the voucher payments not made just because they say pay on this date?  This is what I am trying to confirm from all the descriptions I have read.  Thanks

[Vanessa A]

It IS possible to owe no taxes when you file your return, but still have to pay a penalty. 

As long as your tax liability for each quarter is covered, then you would not have a penalty at the end of the year.  It is about the pay as you go, not the end result. 

This means, if you earn $100,000 total for the year and wait to pay all your taxes until December 1, you WOULD have a penalty.  

If you have taxes withheld by your employer equally that matches what you earned each quarter or you made estimated payments, then you would NOT have a penalty.

The vouchers aren't the important thing.  The thing that is important is that your taxes are paid or withheld throughout the year not just at the end of the year.  

[tuneman01]

My taxes are withheld biweekly.  So, I don't wait till the end of the year.  Is the quarterly amount you refer to the amount printed on the voucher?  Is that the amount that my biweekly withholding should be covering?  Sorry for my confusion.

[ThomasM125]

No, the voucher should not equal what you have to pay in for quarterly taxes. The estimated tax printed on your coupons is intended to make up for not having enough tax withheld from your employer. Your quarterly estimated tax due would be the amount of extra tax you have to pay in, in addition to what your employer withheld, to match you quarterly tax liability.