Skip Estimated Tax Payments?

[donbaker1957]

Turbo Tax calculated Estimated Tax payments for 2017 based on my income for 2016. My income will be less in 2017. If I increase my withholding in 2017 to cover my taxes can I skip the estimated tax payments in 2017 and not get in trouble with the IRS?

[MaryK1 · Accepted solution]

Yes, if you are certain that you will not have the same income OR will have more withholding, you are not REQUIRED to pay estimated taxes, but if you are short next year, the IRS will apply a penalty. 

Generally, a penalty is assessed if you owe $1,000 or more in taxes. The penalty will not be assessed if you paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.

In the TurboTax, we help you with the calculations: https://ttlc.intuit.com/questions/2584228-can-turbotax-calculate-next-year-s-federal-estimated-taxes

[michaelr944]

My spouse has not worked in 2019 and our income is significantly less that was estimated when we filed our 2018 return.  We made estimated payments on time in April and June.  Based on these facts can we adjust downward our estimated tax payments for the rest of the year or maybe stop them completely?

[VolvoGirl]

Yes the estimates are optional to pay.  They didn't get sent with your tax return and the IRS is not expecting them.

[michaelr944]

thank You.  That just confirms what I thought I knew.

[Mystic2]

Sorry for resurrecting an old discussion, but I am desperate for some clarity on this: when TurboTax generates estimated tax forms, so I understand that those do NOT mean the IRS has been told to expect those payments?

I ask because TurboTax created many thousands of dollars of estimated taxes payments for me in 2021 based upon my 2020 income, even though I am going to have ZERO income in 2021, and would instead have to deplete a significant portion of my savings to pay those payments. I am not concerned about the IRS penalizing me for underpayment since my income will be nonexistent, but can they still penalize me for late quarterly payments in that case? (If the estimated tax info isn’t sent to the IRS then I would think the answer would be “no late payment penalties either”, but I really want to be sure.

(Note that my taxes have already been filed, so it is too late for me to prevent that via some change in how I go through my TurboTax process … I just want to know what I have to do now that I have these quarterly estimated tax forms from TurboTax which were part of my printed return.)

[JohnW152]

No, the IRS isn't expecting estimated tax from you just because TurboTax generated estimated tax forms.

And, based on what you’re saying, there won’t be any penalty for not making payments.

Just to make sure you won't need to make these payments, though, please see the TurboTax Help article Do I need to make estimated tax payments to the IRS? and the IRS's Estimated Taxes page for additional information.

[Mystic2]

Thanks very much! I looked at those links and feel confident I won’t have enough interest income to owe any 2021 taxes, and that will be my only income, so I think I’ll be safe.

[408stroker999]

Two separate tax returns for 2019, both had a small refund, did not calculate estimated tax for 2020 so IRS sent me a letter saying that I owe estimated taxes for 2020. Is Turbo Tax the issue or what?    

[Critter-3]

Did the IRS send you blank estimated payment coupons ?    If so you are not required to use them.