My Fed income tax liability is $0 but I underestimated income for the premium tax credit so I owe the IRS over $2k. Do I still need to make est payments for next year?

[RAK01]

I am asking if I should make estimated payments during/for 2022 since I under-estimated 2021 income.

[AmyC]

You have options if you are still getting to much help for your income:

• You can change your income and premiums with ACA so that there is little to no PTC next year.
• You can change your withholding at your job so they take out more during the year. Change your w4 at work.
• You can make estimated payments.

[RAK01]

Appreciate the fast response.  Sorry if I was not clear.  I am only asking if it is required to make estimated payments to avoid a penalty in 2022 since my actual INCOME tax liability for 2021 was $0 but on my return I owe the IRS due to under-estimating my 2021 income for purposes of the ACA.  I am retired and normally do not have a regular income tax liability.  I am assuming I will not have an income tax liability in 2022 but possibly could land in the same situation when reconciling PTC.  I would prefer not to make estimated payments and pay in April 2023 if needed but want to avoid the underpayment penalty.  Not sure if that penalty applies to PTC reconciliation.

[JulieS]

No, you are not required to make estimated payments, even if TurboTax suggests it based on your 2021 tax information. 

Making estimated payments is always voluntary and any vouchers that TurboTax generates for you are for your convenience only and do not get transmitted to the IRS with your tax return. 

That being said, if you owe more than $1000 when you file your tax return, you may owe a penalty. 

[RAK01]

Thank you.  I just wonder if I might owe a penalty if my 'regular' income tax liability ends up at zero, and my PTC reconciliation leaves me owing for the year 2022, similar to how it did in 2021.  In 2021, on my 1040, line 16 shows zero but line 17 has a figure over $1k so I will have to pay that, but, could an under-payment/underwithholding penalty apply to that item?  Not sure if the law (the penalty) applies to that one.  It's unlikely my line 16 (or equivalent in 2022) will be anything but zero.

[AmyC · Accepted solution]

Yes, The PTC could cause a penalty. About Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts shows that if line 22 is more than $1,000, you need to file form 2210.