The penalty for not paying estimated taxes will not affect your 2020 tax return. You can file 2020 taxes now.
Because you did not make the quarterly payments, the amount of those payments will be increased by a 5% per month penalty for each month that they were not paid. But the total of the penalty will not exceed 25%.of the total of all estimated payments.
The penalty for not paying estimated taxes can be added to the 2020 return, depending on how much is owed. TurboTax will compute the penalty and add it to the return. You do not have to wait to get the penalty from the IRS.
As an example, it you owed $1000 for each estimated payment, the penalty would not exceed $1,000. You total amount for the year would be $4,000 and the penalty would not be more than $1000.When you work at a job that gives you a W-2, then your taxes are withheld and sent to the government by your employer. When you are self-employed, you are responsible for paying your own taxes and social security and must make estimated payments four times every year.
TurboTax will help you to determine what your estimated payments will be.
Based on your 2020 tax info, we’ll use the lower of the following IRS approved methods to calculate your estimated tax payments.
- 90% of your estimated 2021 taxes
- 100% (110%) of your actual 2020 taxes
There are two additional IRS approved methods available:
- 100% of your estimated 2021 taxes
- 66 2/3% of your estimated 2021 taxes (farmers and fishermen only)
If you’d like to use one of the additional methods, answer Yes to the question "Do you want to adjust your income or deduction?" on the Review Your Estimates for 2021 screen. Once you review your income and deductions, you’ll have the option to select from any of the four methods.
There will an option to print the 1040-ES vouchers with your return. Make sure that you check that box and then you will have the vouchers when you print your finished return.
You can use the vouchers to make your estimated payments by mail, or you can use IRS Direct Pay to pay the estimated taxes for 2020.
[edited 3/21/2021 | 3:45 pm PST]
