Avoid underpayment penalty
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New Member

Avoid underpayment penalty

Hello,

 

I just found that the tax withheld from my paychecks might not be enough. My AGI is greater than 150,000 and suppose I need to be withheld 110% of my tax bill of 2017, but it's not enough. However, when I looked at my return of 2017, which was done using TurboTax, the number on one 1040-ES plus the paycheck withheld amount should just pass the 110% line.

 

I didn't pay the previous 3 quarters' estimated tax. But can I use 1040-ES to pay the estimated tax of the last quarter (due on 1/15/2019) to avoid the penalty? Knowing 1 quarter's estimated tax + paycheck withheld > 110% of tax of 2017.

 

Thank you.

4 Replies
Level 15

Avoid underpayment penalty

Use the 3rd quarter 1040-ES to pay and hopefully avoid the penalty. If you don't avoid it, then that will "at least" reduce it.

Save the 4th quarter 1040-ES for the 4th quarter payment due Jan 15, 2019.

Level 1

Avoid underpayment penalty

My wife and I have taxes withheld via our jobs, and had to pay the underpayment penalty last year. We only recently discovered my wife not having enough withheld. We corrected this but expect it to be too late in the year for it to allow us to avoid the penalty.

 

We are in a position to pay the IRS extra before the end of 2019 to avoid the penalty. We can estimate how much, but how do we pay the IRS in addition to what is withheld from our paychecks? Thank you. 

Level 15

Avoid underpayment penalty


@jabraham74 wrote:

My wife and I have taxes withheld via our jobs, and had to pay the underpayment penalty last year. We only recently discovered my wife not having enough withheld. We corrected this but expect it to be too late in the year for it to allow us to avoid the penalty.

 

We are in a position to pay the IRS extra before the end of 2019 to avoid the penalty. We can estimate how much, but how do we pay the IRS in addition to what is withheld from our paychecks? Thank you. 


Go to this IRS payments website to pay 2019 estimated taxes using either Direct Pay or a Credit Card - https://www.irs.gov/payments

Level 15

Avoid underpayment penalty

Although making a sufficient estimated tax payment now would avoid an underpayment for Q4, it would not eliminate any interest or penalty for Q1 through Q3 to which you are already subject.  The only way to give money to the IRS now that would reduce any underpayment for Q1 through Q3 is to do it through tax withholding.  It might be better to submit a Form W-4 for each of you requesting on line 6 additional tax withholding 6 for the remainder of the year to make up the difference, then submitting new Forms W-4 beginning next year to drop the withholding back down for 2020.  Keep in mind, though, that employers sometimes have a delay in implementing your instruction from Form W-4, so it might be a bit tricky to get the exactly right amount withheld this way; with regard to avoiding an underpayment penalty, overshooting total withholding would be better than undershooting.

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