Estimated taxes

[0545278996]

I received estiamted tax payments for 2024.  My income for 2024 is going to be much lower for 2024.  Do I still need tp pay the estimated tax for 2024? 

[xmasbaby0]

Are you referring to the 1040ES vouchers?  Those are optional.  You do not have to use them.  Or if you want to cross out the amount printed on them and put in a lower amount, you are allowed to do that.   If you do not expect to owe at least $1000 at tax time next year, you can just ignore those vouchers if you want to.    

[JohnB5677]

No,  

• The IRS does not require estimated payment.
• However, you may get an underpayment penalty.
• The underpayment penalty will be assessed if either of these apply:
  • "If you don’t pay enough tax through withholding and estimated tax payments, you may have to pay a penalty."
  • "You also may have to pay a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return."
• If you are going to have income that does not have taxes taken out of it, you may want to
  • evaluate estimated taxes, or
  • having taxes withheld from the money.
• To avoid the under-payment penalty:
  • The amount you owe is less than $1,000, after subtracting withholding and refundable credits.
  • You paid 90% of the tax that you owed for the current year.
  • You paid 100% of the previous year tax, (110% for higher incomes).

"Typically, underpayment penalties are 5% of the underpaid amount, and they're capped at 25%. 

Underpaid taxes also accrue interest at a rate that the IRS sets annually."

To avoid this situation, it is recommended that you adjust your W-4 with your employer or pay estimated taxes.

Underpayment of Estimated Tax by Individuals Penalty

Edited 04/02/2024 5:00 AM PST