Question

Estimated Quarterly Taxes

Forum|Forum|2 years ago
August 30, 2023
2 replies
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Hello,

For this year, I was given a specific amount to pay quarterly by the IRS after not paying enough in estimates for 2022. For the state, I ended up overpaying. I reduced the quarterly estimate for this year. But I was wondering if I can lower the amount during the last two quarters, or do I have to stick with the amount I sent for Qu. 1 and Qu.2?

Ask the Experts - Self-Employed - Aug 2023

BrenEA

If you feel that your last quartly payments will be too much, yes you can adjust the amount up or down to meet your projected liability. The IRS has a tool that will help you estimate the approximate total amount of tax for the tax year.

https://www.irs.gov/newsroom/this-irs-online-tool-simplifies-estimating-2023-tax-withholding

https://apps.irs.gov/app/tax-withholding-estimator

The reason for estimated taxes is to avoid penalties from underpayment of taxes when you file your tax return.

Some states also have a similar tool on their State Taxation and Revenue website.

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Q

quorumof1

Hi There:

Firstly, It's important to distinguish between an IRS payment plan for back taxes and estimated taxes for future taxes. In the case of an IRS payment plan, changing the agreed upon payment will negate the agreement and have negative consequences. I mention this because typically the IRS does not set up estimated payments since future income is unknown, but I suppose its possible.

Anyway quarterly estimates are voluntary and can be changed as your income changes. The only repercussion is penalty if you end up owing too much.

The Turbo Tax – Tax Caster app is a helpful application to estimate future taxes

TaxCaster