Estimated taxes

6 replies
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I left my sole-proprietorship 20 years ago and I've been paying estimated taxes 4 times a year since then. I would like to opt out of doing that and just pay my income tax in one lump payment during tax season. Do I have to register somewhere....or just stop the quarterly payments? I don't want to be penalized in any way.

(I am a Turbo-Tax customer)

VolvoGirl

Level 15

The estimated payments are optional to pay. You can ignore them. Just be careful if you owe too much when you file your tax return you can pay a penalty.

user17757570881Author

Level 2

Thanks VolvoGirl....but what do you mean I may have to pay a penalty if I owe too much? What's wrong with just paying what I owe?

VolvoGirl

Level 15

The IRS wants you to pay taxes during the year as you earn the income.

If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Even if you are getting a refund you can still owe a penalty for not paying in evenly during the year. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. It is included in your tax due or reduces your refund.