Should I increase my quarterly payment if it appears I will be short by $7,550 for the year? Will this reduce or eliminate a tax penalty?

[Critter]

It will definitely reduce the penalty but may not eliminate it. 

[tygrtchr]

You will still be required to pay the penalty for 2017 underpayment.  If you increase your quarterly payments to compensate for the large shortage, you won't have a penalty for 2018, assuming your income is still in the same range..