First Time Penalty: failure to pay proper estimated tax

Forum|Forum|10 months ago
May 16, 2025
1 reply
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Hello,

I am getting a notice from the IRS stating I didn't pay enough taxes due for the year with my quarterly estimated tax payments. When filing with Turbotax in February I did not see any line stating a penalty amount so I am surprised to see this. Second, I did not work a full 12 months last year so my income is actually less than prior years and what I owed in federal taxes was very high. I am trying to understand why this might be? Is it possible this was miscalculated? I do have some dividends and interest income. Do I just pay this? Can I submit for correction or abatement?

Mike9241

does the notice show the calculation of the penalty because we have no access to your reporting or the notice

the rules:

withholding and timely estimated tax payments must meet the lowest of either of the following

1) 90% of current year tax

2) 100% of last year's tax. That jumps to 110% if your prior year adjusted gross income was over $150,000

also there is no penalty if you owe $1000 or less after subtracting withholding (estimates don't count) from 90% of the current year tax.

not knowing how much is involved we don't know if requesting first time abatement is advisable.

cachuAuthor

The notice does show a % for each period from April 2024 to April 2025 by # of Days and a Rate, Principal and penalty amount. Total penalty due on my part is under $200. I did start working again in April and from January to then I had some unemployment income from California EDD along with some dividends and interest. My income at the beginning of the year was less than April onwards.

Mike9241

@cachu the info you provided is not sufficient to determine if you owe the penalty. to further explain under either test withholding and timely estimated tax payments for each period needed to be 1/4th of the required amount

the periods are 1/1-3/31, 4/1-5/31, 6/1-8/31, 9/1-12/31

to get full explanation of why the IRS charged you a penalty only the IRS can answer that. you'll have to call them or make an appointment to stop in at a local IRS office if one is conveniently located

Call 800-829-1040

Choose your language,
Then choose option 2
Then 1
Then 3
Then 2
When it asks you to enter your SSN or EIN do nothing – wait - - After it asks twice, you will get another menu
Then 2
Then 3

It should then transfer you to an agent. Note when its phone line are busy you may be on hold for a long while or disconnected