I severely underestimated my federal estimated taxes for 2024 due to extra contract work. It's before the last (4th) quarter estimated tax pay date (1/15/2025), so can I pay the extra additional amount in the last estimated payment I make? The amount is different than the estimated tax vouchers produced using Turbox, but I pay online, so do I need to file any new paperwork as long as I keep the receipts to report on my 2024 taxes in April? Thanks!
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When you use the IRS payment website you will receive a confirmation number after all the payment information is complete. No other paperwork is required.
The IRS will send you the number to your email address if you request. I save the IRS email with the number in my saved email folder just in case it is ever needed.
When you use the IRS payment website you will receive a confirmation number after all the payment information is complete. No other paperwork is required.
The IRS will send you the number to your email address if you request. I save the IRS email with the number in my saved email folder just in case it is ever needed.
Thank you so much!
Keep in mind that, unless you received a large portion of your income in Q4 and annualize income on Schedule AI (Form 2210), you'll likely still have underpayments for the first three tax quarters of the year. A Q4 estimated tax payment will not make up for underpayment for earlier quarters, although it will limit the interest and penalties going forward form the time of the payment. The quarterly required payments are determined by your quarterly income and your previous year's tax liability. Your income is treated as having been received evenly throughout the year unless you annualize on Schedule AI.
Thank you for letting me know what to expect! This was my first year estimating, so I will definitely annualize next year. I was not expecting to work as much as I did over the last 3-4 months.
If your estimated tax payments for the earlier quarters were less than the amount needed based last year's tax liability, since a majority of your income was in the later part of the year, you will minimize the underpayment penalty for 2024 by annualizing income on Schedule AI of your 2024 Form 2210. For 2025 you might consider making sufficient quarterly tax payments to satisfy the safe-harbor requirement based on your 2024 tax liability.
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