It depends. If you believe you will have similar income and deductions as last year you can use that return to estimate your income and tax liability. The following will show you how to try to eliminate any penalties for late payment should you have a balance due on your 2023 tax return. The IRS system is pay as you go which means they want the tax dollars when money is earned, however you can eliminate underpayment penalty by checking this information and making a payment with your extension. The extension eliminates late filing fees.
Generally, you can avoid the penalty if your total timely estimated payments and withholdings are greater than or equal to the lesser of:
- 90% of the total tax after credits for the current year, or
- 100% of the total tax after credits in the prior year
- See one exception below.
You can also avoid the penalty if the amount you owe is less than $1,000 as long as any estimated tax payments you made are timely.
Note: High-income taxpayers. If your adjusted gross income (line 11 of your 2023 Form 1040) is greater than $150,000 (or $75,000 if you're married and file a separate return from your spouse), you can avoid a penalty by paying at least 110% of your total tax from the prior year.
Free federal tax extension is available (click this link).
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
