estimated tax

[kennruthie]

Since my income will increase next year, how can I increase the estimated tax that was automatically calculated?

[MindyB]

There are several ways to do this.  You can either directly increase the payments online at eftps.gov (no voucher needed); change the vouchers you printed manually; print vouchers and fill in as desired from the IRS 1040-ES; or update in TurboTax and reprint. 

Here is how to update in TurboTax Online:

1. Navigate to Federal Taxes > Other Tax Situations
2.  Go to Other Tax Forms
3.  Start or Revisit Form W-4 and Estimated Taxes
4. Continue past the W-4 section to get the estimated tax section, Estimated Taxes for 2025 
5. You will be asked if you want to adjust  your income or deductions, answer yes, and manipulate the answers to increase your tax (in other words, estimate up income and/or down expenses)

[baldietax]

See ES FAQ https://www.irs.gov/faqs/estimated-tax

Form 2210 underpayment penalty calculations https://www.irs.gov/pub/irs-pdf/i2210.pdf

To avoid underpayment penalty you need to have paid 100% of your 2024 tax or 90% of your 2025 tax whichever is the smaller (with some other caveats for high income etc which is 110% of 2024 if your AGI > 150k - see IRS details).

TT will default to the 100% of 2024 option unless you go through interview process under "Other Tax Situations" to provide more info on your 2025 income.  But the intent of doing that would be to reduce ES payments not increase them and TT will continue to select the smaller ES amount.

If you expect significant increase in 2025 income then you would be better off paying ES based on 100% of 2024 and pay the balance by April 2026 then you should not have a penalty regardless of your income in 2025.

Either way be sure to pay evenly and on time by the due dates otherwise will trigger penalty calculated quarterly not annually (what the IRS refers to as "timely").

If you are on TT desktop in Forms mode there is a worksheet "Est Tax Options" where you can make updates to these directly; not sure equivalent if any using TT Online.  Also if you pay electronically to Fed via EFTPS then these paper vouchers are not required.

Not a CPA/Expert just my 2 cents to make sure you're aware of your options - see IRS materials for further info.