In order to reduce my underpayment penalty I would like to count my withholdings as paid quarterly. How do I find out how much was withheld from my wages quarterly ?
In order to reduce my underpayment penalty I would like to count my withholdings as paid quarterly. How do I find out how much was withheld from my wages quarterly ?
If you are filling out form 2210 Schedule AI then watch out for the dates. They are different than quarterly dates. And all start with Jan 1. You will need to add up the individual paychecks.
"I would like to count my withholdings as paid quarterly"
No, you don't want to that and you are not allowed to do that. Withholding (unlike quarterly payments) is treated as withheld evenly during the year, no matter when paid. That alone, prevents an underpayment penalty for bad timing.
Common example: Retired person has his entire pension or IRA withdrawal in December and has enough withholding taken out to cover the pension and a big stock sale made back in January. There is no penalty, even though the tax on the January income (gain on stock) was not paid until December.
I recommend not calculating a penalty at all, assuming you can decline it. If you wait for the IRS to do it, they will automatically treat your paycheck withholding as equally spread across the year. Then, when you get the penalty assessment, you can apply for a waiver. If you pre-pay the penalty, you lose the opportunity to apply for a waiver.
the IRS lets you use 2 methods. under the default method, 1/4 is considered paid each quarter. nothing needs to be done in Turbotax because this is automatic unless you select the second method which is using the actual withholding for each period 1/1-3/31, 4/1-5/31, 6/1-9/30and 10/1 - 12/31