I started a new job in March, 2020. I selected the Option 2(c) on my W-4 expecting it to be the conservative option. It now appears we're underpaying. Can I pay now?

[jerod-rudolf]

If I had chosen the 2(b) table option on the W-4, it would've been taking approximately $580 per pay period, instead only $180 has been taken out in each pay period, leaving us with an estimated shortfall of $12.5k in owed taxes.  Can we simply pay this estimate to the IRS now via their only payment?  I cannot for the life of me reach anyone at the IRS to help answer this question.

[Opus 17]

I’m not understanding how you ended up so badly under withheld.  Make sure you use the IRS estimator to confirm this. You may also want to use the TurboTax tax caster for another forecast and see if they are similar.

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

yes, you can make an additional payment now at the IRS website, www.irs.gov/payments.  Make sure you select 2020 estimated payment as the reason.  If your estimate is high or low, the difference will either be refunded to you or result in an additional payment owed when you file your tax return.

However, you will still likely be assessed a penalty for being under withheld during the year. The tax system is supposed to be pay as you go, the IRS expects that your tax payments will be made in roughly equal installments.  If you are under withheld during the year, you can be assessed a penalty even if you pay in full by the time you file.  If this is your first time owing a penalty, when you get the notice, you can apply for first time penalty abatement.  Also note that any interest you owe can’t be abated under law, but the interest will be recalculated if the penalty is reduced.

https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief-due-to-first-time-penal...

[fanfare]

if you make an Estimated Tax quarterly payment, you won't be underwithheld and you won't be penalized.

[fanfare]

Clarification--

• IF you pay a sufficiently large Estimated Tax payment for fourth quarter (due  by 1/15/21), AND
• you check box C on Form 2210,

you can avoid an underpayment of estimated tax penalty.

You would need to do a trial tax return, or do the 2210 form and AI Schedule manually ( not so easy), to determine how large your estimated payment should be.

It sounds like you already know what your payment needs to be to avoid tax due on April 15th.

[Opus 17]

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@fanfare wrote:

Clarification--

• IF you pay a sufficiently large Estimated Tax payment for fourth quarter (due  by 1/15/21), AND
• you check box C on Form 2210,

I don't believe reason "C" applies in this case.  The instructions say "If your income varied during the year because, for example, you operated your business on a seasonal basis or had a large capital gain late in the year, you may be able to lower or eliminate the amount of one or more required installments by using the annualized income installment method."

That is not the case here.  The taxpayer is under-withheld because their W-4 form(s) wasn't right.  They did not have a variable source of income.  I would rather suggest that the taxpayer make a large enough estimated payment to get fully paid up, and then request an administrative waiver if a penalty is assessed.  Including a form 2210 when no tax is owed may clue the IRS in to look further. 

[fanfare]

If there is a checkbox available that helps me, I check it.

In order for Box C to not work, the IRS would have to make an issue of it. This is unlikely.