Solved: Do I need to set up vouchers for federal estimated taxes as suggested? What is penalty next year if we fail to pay estimated taxes?

1 Best answer

New Member

Jun 6, 2019 1:51:01 AM

There are 3 ways you can avoid the penalty:

1. Pay 100% of 2018's tax liability

2. Pay 90% of 2019's tax liability.

3. Owe less than $1,000 total

If you owe the penalty, it is 0.5% of tax owed for each month late. This penalty is not that severe, dollar-wise, unless you grossly underpay.

New Member

Jun 6, 2019 1:51:01 AM

There are 3 ways you can avoid the penalty:

1. Pay 100% of 2018's tax liability

2. Pay 90% of 2019's tax liability.

3. Owe less than $1,000 total

If you owe the penalty, it is 0.5% of tax owed for each month late. This penalty is not that severe, dollar-wise, unless you grossly underpay.

Level 2

Jun 6, 2019 1:51:04 AM

How to avoid estimated tax penalties?

In general, you must pay estimated tax when:

you expect to owe at least $1,000 in tax after your withholding and refundable credits, and.
you expect your withholding and refundable credits to be less than the smaller of (1) 90% of the tax to be shown your tax return, or (2) 100% of the tax shown on the previous year's tax return.

Level 2

Jun 6, 2019 1:51:06 AM

How much is the failure to pay penalty?

The failure-to-file penalty is .05% of your balance due for every month (or part of a month) in which your taxes go unpaid. The amount you owe for this penalty will be reduced by the amount you owe for the failure-to-pay penalty. The maximum amount of this penalty is 25% of your unpaid taxes.

New Member

Jun 6, 2019 1:51:08 AM

@MickeyMath That's failure to file penalty. Failure to pay is 0.5% not 5%

Level 2

Jun 6, 2019 1:51:10 AM

Thank you TuboTax Ashby.

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Do I need to set up vouchers for federal estimated taxes as suggested? What is penalty next year if we fail to pay estimated taxes?