Employer retroactively stopped withholding - how to avoid penalties?

[eia123]

I work at a university as an international scholar. I am a resident for tax purposes. My employer withheld my federal taxes until recently, but in October they decided to suddenly pay out all my withheld taxes for the whole year 2024. Because of their withholding, I have not paid estimated taxes at the IRS.

Assuming that the employer did not make a mistake, and that it indeed decided that I should not have taxes withheld (likely because they consider it a scholarship/stipend rather than salary, and I'm a resident for tax purposes)...

What can I do to avoid IRS penalties for not paying estimated taxes? Is there a way I can pay estimated taxes and communicate to the IRS that the not paying estimated taxes earlier, was outside of my fault? Will they care? Is this something I could do /now/ or when i file taxes?

[Opus 17]

You can make an estimated payment now (for Jan-Aug), although it will be a bit late since it was due Sept 15, and another payment by Jan 15.  Then, just file and wait for the penalty assessment, if it comes.  You can then apply for a waiver or abatement for cause.  Save copies of your correspondence with the university.

https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver

I would not let turbotax or any tax payment include a calculation for an estimated penalty.  It's easier to ask for the abatement when you get a bill, instead of paying the penalty up front and then asking for an abatement.

Depending on how you are paid and who pays your stipend, they might be making the right decision (at the wrong time),  but you don't give enough details to evaluate that. 

[eia123]

Thank you.

Indeed the question was not about whether their decision is correct or not. I don't think that matters too much given that I have little expectation they would be willing to even consider arguments - I just am trying to figure out how to best deal with the situation, given that this happened.

[Opus 17]

Since they have put you in a position where you could be assessed an underpayment penalty, even if you pay your estimates in full by January 15, I think asking for an abatement, and providing your correspondence as proof, is the best way to go.