Low withholding due to mistake in w-4 related to not selecting 2 total jobs (mine + spouse). Can I pay the extra tax before Jan 15, 2021 to avoid penalty ?

[akshaysngupta]

IRS website doesn’t mention anything for individual who are employees and have withholding by employer.

If not for the entire year, can I pay at least for the last 3 months ?

[rjs]

Paying by January 15 probably will not eliminate the penalty because you are still paying late. The tax was supposed to be paid over the course of the year. But if you pay by January 15 the penalty will be less than if you wait and pay when you file your tax return. If you can, you should pay the full amount by January 15, not just the last three months. If you can't pay the full amount, pay as much as you can.

If the amount that you owe is less than $1,000 there will be no penalty. But if your withholding was too low, I suspect you owe more than that.

[akshaysngupta]

Thanks a lot for replying!

Can I use the “Direct pay” option on IRS website ?

If yes, what reason should I give for payment ? “Estimated Tax” ?

When filing my return using Turbo tax, will it be able to account for this payment and also calculate the late penalty that I would need to pay?

[Mike9241]

yes pay now. paying sooner rather than later will reduce any penalties you may owe.  if your paying online using IRS Direct Pay website select estimated tax payments.

when it comes time to file your return penalties, if any,  for underpayment of taxes will be computed automatically unless you ask the IRS to compute them. you also have the option of using the 2210 annualized income method if that produces lower penalties (assuming you have them)

you won't have underpayment penalties if the tax you owe after subtracting withholding is less than $1000

also no underpayment penalties if withholding and timely estimated tax payments are 90% of 2020 tax or

100% of 2019 tax (110% if 2019 adjusted gross income over $150,000) 

one of the questions TT will ask is did you make any estimated tax payments. you'll need to enter the date and amount.