IRS and penalty for underpayment? Can it be forgiven and what are the steps I need to take for that?

[heidimay]

I just finished my taxes and apparently I underpaid this year.  I normally get a refund to the tune of thousands of dollars.  I checked my last 10 years of taxes, and 2 years ago I owed $78, and several years before that I only got back $93.  EVERY other year I received an average of $1500-4000 back.  This year TT says I owe $5000, and a $142 underpayment interest penalty. 

My question is how would I ever know to change my withholdings? I am 53 years old and live in California. One of my 2 dependents aged out, and I got a raise of about $4000-5000, but wow, what a change in taxes due!  Can I petition the IRS to waive the underpayment penalty? 

Also, TT (really, probably the IRS) is requiring me to pay estimated taxes for the upcoming year.  I already changed my W4 (using the IRS W4 estimator tool) and just submitted it to my employer today.  Am I stuck making estimated payments for this year and just have to expect a very large refund next year (since I already changed my W4 and would still be making estimated payments).  If I make estimated payments this year, and I required to continue making them every year from now on? Thanks

[Bsch4477]

See information about first time waiver here. 

https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver

Making estimated payments is up to the taxpayer both in the amount and frequency of payments. 

[Mike9241 · Accepted solution]

form 2210 instructions

Waiver of Penalty
If you have an underpayment, all or part of the penalty for that underpayment will be waived if the IRS determines that:
• In 2021 or 2022, you retired after reaching age 62 or became disabled, and your underpayment was due to reasonable cause (and not willful neglect); or
• The underpayment was due to a casualty, disaster, or other unusual circumstance, and it would be inequitable to impose the penalty. For federally declared disaster areas, see Federally declared disaster, later.

i see noothing i n your post that would indicate you have reasonable cause for the IRS to waive all or part of your penalty.

 do check your return to make sure all information was entered correctly.

if you changed the w-4, paying estimates may not be required 

here's the simplest way to avoid penalties for 2024 since you have withholding. By year-end make sure withholding is 100% of your 2023 tax. that's the amount that would show up on line 8 of the 2210. It's 110% if your 2023 adjusted gross income was over $150,000

you can use the instructions below to compute this amount but the simplest way to know this number is

to review the Turbotax Estimated tax Payments Options worksheet 

it should appear on the line referring to the 100%/110% option

Line 8
To figure your 2023 tax, first add the amounts listed in (1) below, then
subtract from that total amount the refundable credits listed in (2), later,
that are shown on your 2023 tax return.
(1) Add the amounts  shown on your 2023 tax return.
1040,or 1040-SR
Line 22,
Schedule 2 (Form 1040):
Line 4,
Line 8 (additional tax on distributions only),
Line 9,*
Line 10,
Line 11,
Line 12,
Line 14,
Line 15,
Line 16,
Line 17a,
Line 17c,
Line 17d,
Line 17e,
Line 17f,
Line 17g,
Line 17h,
Line 17i,
Line 17j,
Line 17l, and
Line 17z
(2) Subtract refundable credits listed below.
Subtract the total of the following refundable credits, if any, that you
claimed on your 2022 tax return.
• Earned income credit.
• Additional child tax credit.
• Refundable part of the American opportunity credit (Form 8863,
line 8).
• Premium tax credit (Form 8962).
• Credit for federal tax paid on fuels.
• Qualified sick and family leave credits from Schedule(s) H
(Schedule 3 (Form 1040), lines 13b and 13h).
• Credit determined under section 1341(a)(5)(B

[heidimay]

Thank you!