Estimated Tax Payments

[Shadoobee]

I estimated tax payments of $750 per quarter.  However, I worked my side gig more than expected and my estimation was way off.  I owe a little over $5,000.  I have several questions related to this:

--I paid estimated taxes of $3,250, but in my IRS account shows only my direct payments of $1,750. (I have documentation of all the payments).  

Question 1: Will I get an audit if the taxes I paid does not match what the IRS shows in my account? (My other payments went thru another payment system offered on the website.)

Question 2: I am ready to file and pay my taxes through Turbo Tax. Should I just pay what is owed through my direct IRS account?

[JohnB5677 · Accepted solution]

You have two good questions:

Question 1: Will I get an audit if the taxes I paid does not match what the IRS shows in my account? 

• The IRS is going to evaluate everything you have paid for estimated taxes.  If they don't agree you will get a tax notice.

(My other payments went thru another payment system offered on the website.)

• As long as it is in their system it will be okay.

Question 2: I am ready to file and pay my taxes through Turbo Tax. Should I just pay what is owed through my direct IRS account?

• Yes, paying it through your direct account will work well.

[Shadoobee]

Thank you for answering those questions.  Since I underestimated what my side gig earned I have a penalty. Here is what I wrote in my return to waive my penalty:

2023 is the first full year I retired from my career job where taxes were deducted each month with predictable pay. I ended up working a part-time job where I claim my hours each month as an independent contractor. I used the tax form to estimate my wages and the estimate qtr payment was $750. However, my estimation came up short. I did not anticipate working this many hours and ended up earning more than expected.

Question: Will this explanation suffice?

[DawnC]

It will if you have recently retired.  From the IRS:  We understand that circumstances—such as a serious illness or injury, a family member's death, or similar circumstance beyond your control—may make it difficult for you to meet your estimated tax payment obligation in a timely manner. While the penalty for underpayment of estimated tax generally cannot be waived for any such reason, we may reduce a penalty if any of the following apply:

• You or your spouse (if you file a joint return) retired in the past 2 years after reaching age 62 or became disabled and you had reasonable cause to underpay or pay your estimated tax late.  See Waiver of Penalty in Instructions for Form 2210PDF.
• You had most of your income tax withheld early in the year instead of spreading it equally through the year. Complete Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and TrustsPDF.
• Your income varies during the year. Complete Form 2210, Schedule AI, Annualized Income Installment Method PDF(found within the form).

The penalty for underpayment of estimated tax can also be removed to the extent that the underpayment is the result of a casualty, local disaster, or other unusual circumstance such that it would not be fair to impose the penalty.

• If you think you qualify for a waiver of the penalty under any provision explained above, please send your written explanation, signed under penalty of perjury, to us at the address at the top of this notice.