Federal Taxes owed exceeds $1000, how to avoid penalty?

[TaxNoob8]

Hello Turbotax Forum,

I just used a federal tax estimator and it shows I owe more than $1000. Also did not pay more than 90% of owed money this year.

My HR is slow in updating the W4 so I don't think they will be able to update my withholding before the year is over. So I was wondering if it's possible to pay IRS directly using the Online payment option or mailing option to avoid penalty.

If not is there any other way to avoid penalty if you owe more than $1000 and did not pay more than 90% owed?

Thank you!

[VolvoGirl · Accepted solution]

You can send in an extra estimated payment.  You can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2023 Estimate

If you have a penalty on 1040 line 38,  You might be able to eliminate it or at least reduce it.  You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.  It's form 2210.

It's under

Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

[Opus 17]

First, you will want to make an estimated payment before January 15, as indicated.

Second, my suggestion is that if TurboTax suggests that you owe a penalty and offers to calculate the penalty, you should decline it. Wait and see if the IRS actually bill you for a penalty. If they do, you can apply for an abatement or a waiver for cause, or if this is the first time you have owed a penalty. If you voluntarily pay the penalty with your tax return, it’s much harder to ask for the abatement later.

[Mike9241]

@TaxNoob8 the IRS considers an equal amount of withholding withheld for each period though you can use your actual withholding.  estimated tax payments only count based on the date paid so you could still have penalties for the first 3 quarters. the other options are to use the annualized income method ( page 3 of the 2210) or request abatement as previously mentioned.