quarterly taxes

[johnwinkelman]

I was hit with a penalty from the IRS for not filing quarterly taxes last year. I didn't know that I had to pay them. Why do I have to pay quarterly taxes and how can I avoid it?

[evelynm]

If you expect to owe more than $1,000 in federal taxes for the tax year, you may need to make estimated quarterly tax payments or else face a penalty for underpayment which is likely what happened to you.   

To avoid penalties your federal income tax withholding (plus any timely estimated taxes you paid) amounts to at least 90 percent of the total tax that you will owe for this tax year 2024, or at least 100 percent of the total tax on your previous year's return 2023 (110 percent for AGIs greater than $75,000 for single and separate filers and $150,000 for married filing joint).

Here are further details regarding estimated tax payments:   Estimated tax requirements 

I recommend you use our Tax Caster tool to estimate your tax liability and it will even provide a W-4 if you need to adjust your withholdings:   Tax Caster