Fellowship

Forum|Forum|2 years ago
November 3, 2023
1 reply
0 views

Hello,

I believe I owe quarterly tax payments for the tax year 2023. I earned income with tax withheld January-June 2023, then received monthly fellowship payments with an initial pay date of September 15.

Because I first got paid for the fellowship on the same date as the 3rd quarter tax payment, does that income count towards the last quarter payment (I am wondering if I will receive a late penalty?)

Thanks!

Best answer by Hal_Al

Q. Money received on Sept 15 (same date as the 3rd quarter tax payment) does that income count towards the last quarter payment ?

A. Yes. The 4th tax quarter is actually 4 months long Sep 1 to Dec 31. See @NCPERSON1 reply below.

Q. I am wondering if I will receive a late penalty?

A. Probably not.

A penalty is due if for the current tax year if both of the following apply:

- 1. You owe at least $1,000 in tax for the current tax year, after subtracting your withholding, quarterly estimates and credits.
- 2. Your withholding and credits are less than the smaller of: 90% of the tax to be shown on your current year’s tax return, or 100% of the tax shown on your prior year’s tax return. (110% if your AGI was more than $150K) . Your prior year tax return must cover all 12 months.

Hal_AlAnswer

Employee

Q. Money received on Sept 15 (same date as the 3rd quarter tax payment) does that income count towards the last quarter payment ?

A. Yes. The 4th tax quarter is actually 4 months long Sep 1 to Dec 31. See @NCPERSON1 reply below.

Q. I am wondering if I will receive a late penalty?

A. Probably not.

A penalty is due if for the current tax year if both of the following apply:

evamking27Author

If I received all this fellowship during the 3rd and 4th quarters (and it turns out that I do need to pay quarterly estimated payments), then how does the IRS know that I received this income during the 3rd and 4th quarters? I did not know that this stipend would be in fellowship form earlier in the year, so I couldn't possibly have paid estimated tax payments during the 1st and 2nd quarters. So will I be penalized for these quarters too, if the IRS is only interested in total annual amounts? My understanding was that you only send quarterly payments with no forms indicating your income for that quarter - the payments are based on your total estimated annual income.

Thank you for your help.

Hal_Al

Employee

Q. How does the IRS know that I received this income during the 3rd and 4th quarters?

A. They don't. You have to tell them.

Q. My understanding was that you only send quarterly payments with no forms indicating your income for that quarter - the payments are based on your total estimated annual income. So will I be penalized for these quarters too, if the IRS is only interested in total annual amounts?

A. If you send in four (4) equal estimated payments, then it doesn't matter that your payments match your income. When TurboTax sees that you have entered four unequal payments (or less than 4 payments), it will ask you to enter your income by quarter and fill out form 2210 to calculate the under payment penalty.