Do I really need to make the quarterly 1040-ES Payment Turbo Tax calculated?

[diverjer]

My wife and I are both retired and don't work.  Because of some good interest earned on CDs, we ended up owing Feds over a $1,000 which I plan on paying in full and on time.   This has never happened before.  The penalty figured to be only $20.00.  No big deal!

So now Turbotax says I need to pay $300 each quarter.  Next year I don't believe we will have the interest income we did this year that drove us over the $1,000.  

What if I don't pay the quarterly $300? 

One year the State of Kansas wanted quarterly payments (I owed more than $500) and I just ignored them and they just add a penalty the following year because I once again owed more than $500.    No big deal small amount penalty and better than pain of paying each quarter.  The penalty was so small I didn't care, it was worth it not to deal with payments every quarter.

If the Federal IRS does the same, I just as soon pay $20 or so a year as dealing with sending payments each quarter.  My question is if I skip the 1040-ES quarterly payments and still owe over a $1,000 next year, I just soon pay that small penalty as deal with quarterly payments.  But I don't know if the Feds deal with it like that or they get real angry for not sending in the quarter 1040-ES and charge some additional penalties?     

[Bsch4477]

No special penalty for repeated underpayment. 

[diverjer]

Thanks.

I wouldn't have owed that much if the bank had done their job right.  I always have used my IRA RMD as a QCD to lower taxes.  Went to bank to get my RMD last year and no one there at the time knew what taking a RMD as a QCD meant or how to do it.  I got a bit angry and said just do a regular RMD.  I should have not got mad and went back later or to another branch office. 

Anyway, I don't really mind giving them another $20.00 as penalty, hope they make good use of it.  But I really didn't want to make quarterly payments, it just a pain to do it.  I am retired and not self employed, so shouldn't be forced into quarterly payments.  This year I will do the QCD as I have in the past and won't owe as much. 

Just wanted to make sure that they didn't charge additional penalties for not doing the 1040-ES.  Also, seems Turbo tax should have an option to make the amount on the 1040-ES different?  But maybe they do for the business version, I have the Deluxe. 

Thanks 

[SteamTrain]

IF you have pension income, you could call the pension administrator, and see if you can have them add in an extra $50 a month in withholding over whatever standard amount they are withholding now.   Sometimes they can do that just by calling.   Other times they want you to re-submit an actual W-4P, and then it gets messier.

That extra money withheld monthly is just a nominal amount, and the total extra $600 withheld may get you below the $1000 threshold for 2025, and more into the realm breaking even at year-end.

[SteamTrain]

Any 1040ES forms created by the software...the IRS doesn't know they were prepared, so the IRS isn't expecting them to show up.

In the Desktop software, you can fairly-easily change the amounts on them in Forms Mode, and also check a box to round up to the next $1, or $10, or $100 (because who can really determine what the end of the year will bring), but that's not available in the Online software.

[diverjer]

They would require me to fill out W-4P.  But it looks pretty simple.  Complete Step 1, then skip to Step 4c and enter the $50.00 (or whatever amount).  Then sign it in step 5. 

[SteamTrain]

Then wait 2 or 3 months and see what they finally withheld...to make sure it happened somewhere close to the way you wanted.  

[diverjer]

Actually got letter beginning of 2025 that federal withholding went down, actually get one every year.  In the letter they always say "Federal tax withholding tables have changed and as a result your benefit has changed".  The federal tax withheld has gone down every year.   Looking back, have gotten similar letter for last several years "Federal Tax Withholding Change" and each year the withholding goes down.  It has happen so slowly over the years, I never really noticed how big of percentage it has dropped. 

[diverjer]

As I look more and played with Turbotax, I found I would still owe $1,021 even if I had done the QCD- so still would have a penalty and Turbotax generating 1040-ES.

Well I am not sending in the 1040-ES, will pay full amount owed with penalty and will get more taken out with W-4P change in Step 4c.  Also, do my QCD this year.  So will owe less than the $1,000 next tax season. 

Hopefully the Feds don't get upset for not getting quarterly 1040-ES payments.    Think they would have bigger fish to fry.   

[AnnetteB6 · Accepted solution]

You are not required to make estimated payments.  The purpose is to avoid having an underpayment penalty.  But, if you increase your withholding from another source and you are willing to pay the penalty if there is one on your next year's return, then there is no issue with not making the estimated payments.

@diverjer