Single filer 0 w4 allowance, W2 income + 5k interest + 4k LT cap gains. Owe $1100 tax. I'm supposed to start making qtr estimate pmts if these small int/gains continue?

[Rachel_W · Accepted solution]

Yes, you will most likely need to make estimated tax payments OR have an additional amount withheld from your paycheck for federal taxes.  Having an extra amount deducted each paycheck is usually easier and can be done by completing a new Form W-4 through your Employer.

In order to avoid an Underpayment/Estimated Tax Penalty in 2018, you will need to make sure you meet the IRS "Safe Harbor" by having total withholding and/or estimated tax payments equal to the smaller of:

• 90% of your 2018 Tax Liability
• 100% of your 2017 Tax Liability (110% if your adjusted gross income is over $150,000 or $75,000 if Married Filing Separate)

The penalty will not apply if your balance due is less than $1,000.  

I would recommend making sure to pay in at least 100% of your 2017 Tax Liability to avoid the penalty next year since it is difficult to determine your 2018 Tax Liability until closer to the end of the year.

[utskiaouee]

maybe i'm just a little surprised at my relatively small level of interest and capital gains i will have to start doing quarterly estimates. I guess it's because i don't have any deductions except the standard. thank you