The IRS W-4 tool is suggesting I may owe about 40% of my anticipated tax obligation at the end of the year under ordinary income tax rules. However, I expect to trigger AMT as well. Given that I will be paying more under AMT anyway, is there any incentive for me to withhold additional taxes from my paychecks to reduce my taxes owed under ordinary income tax rules?
You'll need to sign in or create an account to connect with an expert.
Yes. If you are required to make estimated tax payments. It does not matter whether for ordinary tax or AMT.
Hello @howahlah !
Thanks for the question!
The main reason to pay estimated tax or to increase withholding is to avoid having a "Failure to pay estimated tax" penalty at the end of the year. The more you owe (AMT or otherwise), the greater this penalty can be. In general, as long as you have withheld at least 90% of your current year tax liability, or 100% of your prior year tax liability, you will not owe a penalty.
If you know ahead of time that you will be facing a large tax bill, making estimated payments quarterly or increasing withholding is a good idea!
All my best,
Adam, EA
TurboTax Live Expert
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
alfonsov2
New Member
zsunlight
New Member
henry212
New Member
carolmccla
New Member
punya-biswal
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.