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Estimated tax

iHmsef8l

I was fined for not filing estimated tax for 2023 I was not aware it was necessary ,I have never filed estimated tax all the time I have used freetax nor was I advised by freetax to do so ,I have since had withholding applied to my pension account, I am concerned about filing for 2024 will I be fined again

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iHmsef8l

Please advise

JohnW

There is a section in which you can set up estimated taxes:
Across the top there are the various menus:
Personal
Income
Deductions/Credits
Misc.
Summary
State
Final Steps.

The Miscellaneous Topics Section (Misc), the center column, has a Payments section, The last of the four items will be to set up 2025 estimated payments.

While we don't calculate the payments, there is link to an IRS worksheet to do so.

Basically, to determine how much you need to pay in estimated tax payments, you need to figure out how much withholdings from W-2s etc. and estimated payments you need to make to do one of the following:

Pay 90% of the tax bill you think you will have next year, or

Pay 100% of the tax shown on your 2024 tax return

As a practical matter the simplest was is to pay 25% of the prior year's tax each quarter, the second option.

Although we generate the payment coupons to accompany and check you can't pay the estimated tax through FreeTaxUSA.

All comments

iHmsef8l

Please advise

jnewell7

Hi Himself8!

That's a great question.

I'm sorry hear that you ran into some issues while filing your 2023 return.

The IRS states:

'Taxes are pay-as-you-go. This means that you need to pay most of your tax during the year, as you receive income, rather than paying at the end of the year. The Underpayment of Estimated Tax by Individuals Penalty applies to individuals, estates and trust that don't pay enough estimated tax on their income or you pay it late.'

You can check out this website for more info:

Underpayment of estimated tax by individuals penalty | Internal Revenue Service

The taxes you owe throughout the year are usually paid through two methods. Either taxes are withheld from your income, or you make estimated tax payments throughout the year.

If you did not have enough taxes withheld from your income and are receiving the penalty, you can contact your employer or the issuer of the respective tax form and request that more taxes be withheld from the income. Otherwise, you would generally need to make estimated tax payments during the course of the tax year.

This IRS tool can help you figure out how much you want your employer to withhold from your paycheck:

Tax Withholding Estimator | Internal Revenue Service

If your taxes are not being withheld from wages, you can try and figure out your estimated tax for the upcoming tax year to try and avoid any penalties. When figuring your estimated tax for the current year, it may be helpful to use your income, deductions, and credits for the prior year as a starting point. You can start a tax return using our software and enter in your estimated information. You can follow this menu path to get to the Underpayment Penalty section of the software:

Misc > Payments > Underpayment Penalty (Form 2210)

This should provide you with an estimate of what you might owe.

You can then make plans to pay any needed estimated taxes throughout the upcoming tax year. Individuals generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed.

Estimated tax payments are generally due:

April 15 for income earned January 1 to March 31
June 15 for income earned April 1 to May 31
September 15 for income earned June 1 to August 31
January 15 of the following year for income earned September 1 to December 31

You can make those payments online here:

Payments | Internal Revenue Service

Note, since the tax year is almost over, this may not prevent you from being charged with penalties on your upcoming 2024 return but should hopefully solve the issue for your future tax returns

jws00hen20

Hope Freetax USA will include estimated tax in the tax return program.

CoryF

Thank you for this response.

The FreeTaxUSA software does have a screen for you to click and figure acceptable amounts for Estimated Tax payments for the dates included above. This page is located in the Misc section tab. Follow this menu path:

Misc > Payments > 2025 Estimated Tax Payments.

This screen will help you with the proper amounts to pay the IRS. The IRS makes it super easy to pay the estimated payments by creating an IRS account, or you can use the Payments link provided above.

JohnW

Pay 90% of the tax bill you think you will have next year, or

iHmsef8l

Thanks everyone for your help

TaxExperJtJ

If you filed your taxes wrong 2 years in a row and ended up having to pay the IRS that money as well as interest and penalties and now you amend the returns and should've been actually getting a return how can you get the money back you paid the IRS

PhillipB

https://community.freetaxusa.com/discussion/comment/5580#Comment_5580

Hi,

You will get a refund on amended returns for years where you have paid taxes if it has been less than the latest date of either:

3 years from the date of the original filing or
2 years from the date that the tax was paid

The IRS can take between 8-16 weeks to process amended returns. Given IRS underfunding, I would plan on the 16 weeks.