Tax Year 2025 California Estimated Taxes

[Mochina]

My son is receiving a tax year 2024 federal tax refund, primarily because of a Life Learning credit.

However, for 2024 he does owe approximately $400 in California taxes, in addition to his state tax withholding and an estimated tax payment. 

Given estimates of 2025 income and federal tax withholding, he will not need to make federal estimated tax payments, even though he has significant dividend/capital gains income from investments and will not be eligible for any more educational credits. He is trying to figure out whether he should make California estimated tax payments for 2025 to avoid an underpayment penalty and if yes, how much.  Based on choosing to pay a 2025 California estimated tax equal to 100% of his 2024 tax, TurboTax indicated that his "estimated tax due is $6, an amount less than the $500, the minimum required payment." But TurboTax still asks him if he wants to pay estimated tax for 2025. When he answers "yes" because he doesn't want to take the chance that he is penalized for paying less than 100% of his 2024 tax, TurboTax creates vouchers for an estimated tax payment of $2 each for 3 quarters of 2025. This is a little ridiculous.  What is going on? Obviously, $6 is less than the $500 which TurboTax indicates is the minimum required payment. Should my son want to be conservative and pay a total estimated tax of $100, for example, split over 3 quarters, can he do so even though it is less than the $500 minimum required payment? 

[JotikaT2]

It depends.  It does not hurt to make the estimated tax payments to California if he prefers to. 

If his state tax liability for 2025 is expected to be over $500, and the amount of his withholdings is the smaller of 90% of the 2025 tax or 110% of his tax as reflected on his 2024 tax return, then he should make estimated tax payments.  The installments paid are typically 30% of your total expected tax for quarters 1, 3, and 4, while 40% would be due with the 2nd installment.

Please see this link from the Franchise Tax Board for more information on estimated tax payments.  The payments can be made directly to the Franchise Tax Board using the instructions.