Solved

Does payment of estimated tax. as recommended by TurboTax, guarantee that I will not be subject to a penalty for underwithholding?

Forum|Forum|6 years ago
April 7, 2020
1 reply
0 views

No text available

TurboTax Online

Best answer by DianeC958

Yes, if the information you put into TurboTax for your income and other withholding is accurate.

The safest option to avoid an underpayment penalty is to aim for "100 percent of your previous year's taxes." If your previous year's adjusted gross income was more than $150,000 (or $75,000 for those who are married and filing separate returns last year), you will have to pay in 110 percent of your previous year's taxes to satisfy the "safe-harbor" requirement. If you satisfy either test, you won't have to pay an estimated tax penalty, no matter how much tax you owe with your tax return.

If you expect your income this year to be less than last year and you don't want to pay more taxes than you think you will owe at year end, you can choose to pay 90 percent of your estimated current year tax bill. If the total of your estimated payments and withholding add up to less than 90 percent of what you owe, you may face an underpayment penalty. So you may want to avoid cutting your payments too close to the 90 percent mark to give yourself a little safety net.

If you expect your income this year to be more than your income last year and you don't want to end up owing any taxes when you file your return, try to make enough estimated tax payments to pay 100 percent of your current year income tax liability.

Estimated Taxes: How to Determine What to Pay and When

@marcysurles6403

D

DianeC958Answer

Yes, if the information you put into TurboTax for your income and other withholding is accurate.

The safest option to avoid an underpayment penalty is to aim for "100 percent of your previous year's taxes." If your previous year's adjusted gross income was more than $150,000 (or $75,000 for those who are married and filing separate returns last year), you will have to pay in 110 percent of your previous year's taxes to satisfy the "safe-harbor" requirement. If you satisfy either test, you won't have to pay an estimated tax penalty, no matter how much tax you owe with your tax return.

If you expect your income this year to be less than last year and you don't want to pay more taxes than you think you will owe at year end, you can choose to pay 90 percent of your estimated current year tax bill. If the total of your estimated payments and withholding add up to less than 90 percent of what you owe, you may face an underpayment penalty. So you may want to avoid cutting your payments too close to the 90 percent mark to give yourself a little safety net.

If you expect your income this year to be more than your income last year and you don't want to end up owing any taxes when you file your return, try to make enough estimated tax payments to pay 100 percent of your current year income tax liability.

Estimated Taxes: How to Determine What to Pay and When

@marcysurles6403

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

W

WhyTaxMe2

My employer withholds federal tax from my compensation. And I received misc. compensation in Quarter 4. I understand the rule is: To avoid a penalty, you must pay (i) at least 90% of the tax you owe via withholding or estimated tax payments or (ii) 110% of the tax shown on last year’s return, whichever is smaller. With employer withholding and estimated tax payment for Quarter 4 (before Jan. 15, 2025), I paid over 90% of my 2024 tax liability. However, TurboTax is forcing me to pay a penalty because I don't meet the 110% rule. It won't even apply the 110% rule. And I cannot override it.

Am I missing something or is this a TurboTax flaw?

K

KeshaH

If you'd like, we can look at your return and see exactly what you see to help come to a resolution. The return will be scrubbed and won't include any of your personal details.

If you're using TurboTax Online:

Once you're logged in to your account,

- on the left hand panel, click on Tax Tools and then choose Tools

- on the pop up window, select Share my file with Agent

- you'll see a message saying you'll give us a copy of your tax return. Your personal information will be changed so we can't see any private information.

- click okay and you'll get another message with a token

If you're using TurboTax Desktop:

Click on Online in the top menu of TurboTax Desktop for Windows
Select 'Send Tax File to Agent'
Write down or send an image of your token number and state then place in this issue.
We can then review your exact scenario for a solution

Please reply to this message with your token so that we can further assist you. Let us know all other states that are included on the return.