For 2025, must I pay quarterly estimated tax payments if I owe greater than $1000 (in 2024), if I am already increasing the fed tax withheld % from my IRA's?

[blwolfe14]

I was doing my 2024 taxes on turbotax and this is the first time that I owe greater than $1000; usually I owe less than $500; and I am fine with this.  For 2024 I had much greater income, the biggest culprit was due to receiving much greater than normal interest and dividends income, thus causing me to owe greater than $1000.   Turbotax calculated that I owe $1002 + $29  penalty, thus totalling $1031 to owe.  I have never ever needed to do quarterly estimated payments before.  Turbotax is showing I should make quarterly estimated payments for 2025.  I am already n the process of increasing the fed tax % that is deducted from my IRA's distributions.  So this will help me in not owing greater than $1000 for 2025 filing.  MUST I make the quarterly estimated payments as Turbotax shows OR I am fine knowing I am increasing my fed tax % deducted from my IRA distributions?

[Vanessa A]

No.  If you are having an additional amount deducted from your IRA's, then you do not need to pay quarterly taxes in addition to the increased deduction.  As long as you cover the amount you owe, whether through deductions or quarterly payments, you are fine. 

[blwolfe14]

Thanks for answer.  I kind of thought that, but wasnt sure.  Because if I increased my fed tax % from my IRA's and also paid Estimated Payments, I would be paying near twice as much taxes, and then have to wait for a refund.

Do you know if there is any way out of the $29 penalty for my 2024 filing?

[Vanessa A]

Yes. There are a few reasons you will be able to be exempt from the penalty.

1. you paid 90% of your tax liability for the year
2. you paid 100% of your tax liability of 2023
3. In 2023 or 2024, you retired after reaching age 62 or became disabled, and your underpayment was due to reasonable cause (and not willful neglect); 
4. 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.

 In the Other tax situations sections of TurboTax, you will see underpayment penalties. This form will allow you to possible avoid the underpayment penalty if you qualify.