I would like to understand estimated taxes better. I am employed at a company
Due to an issue in my w4 form, it seems I have been underwithholding on my taxes. I am heading towards not paying 100% of my prior year's tax obligation.
At this point, to avoid an underpayment penalty, could I pay a lump sum estimated tax payment before the Q4 deadline to match the difference and ensure I have paid at least as much as 100% of my prior year obligation?
I have read that estimated tax to be paid evenly throughout the year.. So trying to understand if making a Q4 estimated tax payment would even help at this point.
if possible, the best thing to do is to submit a revised w-4 so your withholding for the year will be 90% of your 2023 tax or 100% off 2022 tax. 110% of 2022 tax if your 2022 adjusted gross income was $150,000 or more.
paying a 4th quarter estimate won't protect you from underpayment of taxes for the first three quarters. increasing your withholding as described above will.
Thanks for the response. Yes that makes sense.
If working a W2 providing job, how does the IRS calculate the tax burden for each quarter? Is this automatically calculated by turbotax?
If I realize that I will not be able to meet the 100% of last year tax burden requirement, is it still worth paying some estimated tax just in Q4 so that I at least will not have a penalty for this quarter?