Im still working out a tax snafu with my employer (employer messed up by not entering my W-4 details correctly and significantly under-withheld) and I am going to owe $xx,xxx. I realize I am likely to have to pay it myself, but I haven't resolved the issue and don't want to file a return until I have it all sorted out.

Do I need to go ahead and send a check for the estimated amount due to avoid interest and other penalties on the underpayment from the last year even if I file an extension?

Thanks. I guess I can just resolve the difference when I file the return, assuming the IRS has deposited the check by the time I file.

Side question - Doe anyone know if filing a 4669 (employee) and 4670 (employer) will result in waiving any underpayment penalties that would normally be assessed for underpayment over the last year? These are the forms the IRS requires when an employee has submitted a correct W-4 but the employer makes a mistake entering the exemptions in their payroll system.

Yes. The extension is only an extension to file, not an extension to pay. Whenever you do file, you'll have the option to refund any overpayment or just apply it to this year's taxes filed early next year.

Pay estimate. Extend. Work out the kinks and various nuances. File complete return later. No worries

Sooner Born said:

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Yes. The extension is only an extension to file, not an extension to pay. Whenever you do file, you'll have the option to refund any overpayment or just apply it to this year's taxes filed early next year.

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Copy that, thanks.

Anyone ever dealt with this before? The W-4 I submitted had a box checked that my employer failed to check in its payroll system, leading to the under-withholding. I'm hoping I can at least avoid getting slapped with a penalty.

Definitely pay something, because any balance will accrue interest/penalties

This is an honest question, not sarcastic: did you not notice you were making $xx,xxx more than you were the previous year?

You can also pay online instead of mailing a check.

SweaterVest said:

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Sooner Born said:

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Yes. The extension is only an extension to file, not an extension to pay. Whenever you do file, you'll have the option to refund any overpayment or just apply it to this year's taxes filed early next year.

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Copy that, thanks.

Anyone ever dealt with this before? The W-4 I submitted had a box checked that my employer failed to check in its payroll system, leading to the under-withholding. I'm hoping I can at least avoid getting slapped with a penalty.

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Which box was that?

SweaterVest said:

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Im still working out a tax snafu with my employer (employer messed up by not entering my W-4 details correctly and significantly under-withheld) and I am going to owe $xx,xxx. I realize I am likely to have to pay it myself, but I haven't resolved the issue and don't want to file a return until I have it all sorted out.

Do I need to go ahead and send a check for the estimated amount due to avoid interest and other penalties on the underpayment from the last year even if I file an extension?

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a resounding yes. It's all about the $.


Basics of estimated taxes for individuals | Internal Revenue Service (irs.gov)

Having said that if you had more income in 2022 compared to 2021, you only have to pay up to 90% of last years tax to avoid penalty. meaning the amount withheld, plus any additional amount you pay now needs to equal last years tax.

The U.S. tax system operates on a pay-as-you-go basis. This means that taxpayers need to pay most of their tax during the year, as the income is earned or received. Taxpayers must generally pay at least 90 percent (however, see 2018 Penalty Relief, below) of their taxes throughout the year through withholding, estimated or additional tax payments or a combination of the two. If they don't, they may owe an estimated tax penalty when they file.

BearJew13 said:

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This is an honest question, not sarcastic: did you not notice you were making $xx,xxx more than you were the previous year?

You can also pay online instead of mailing a check.

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That's a fair question. I started a new job with a different comp structure at the beginning of the year and didn't hand calculate expected withholding to cross check what my employer was taking out. There was a lot going on and checking tax withholding never made it to the top of the list.

The box that indicates my spouse works and makes roughly the same amount I do. Employer withheld as if I was the only income for our family.

Understandable, that sucks. Sorry you're in this situation...

txaggieacct85 said:

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SweaterVest said:

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Im still working out a tax snafu with my employer (employer messed up by not entering my W-4 details correctly and significantly under-withheld) and I am going to owe $xx,xxx. I realize I am likely to have to pay it myself, but I haven't resolved the issue and don't want to file a return until I have it all sorted out.

Do I need to go ahead and send a check for the estimated amount due to avoid interest and other penalties on the underpayment from the last year even if I file an extension?

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a resounding yes. It's all about the $.


Basics of estimated taxes for individuals | Internal Revenue Service (irs.gov)

Having said that if you had more income in 2022 compared to 2021, you only have to pay up to 90% of last years tax to avoid penalty. meaning the amount withheld, plus any additional amount you pay now needs to equal last years tax.

The U.S. tax system operates on a pay-as-you-go basis. This means that taxpayers need to pay most of their tax during the year, as the income is earned or received. Taxpayers must generally pay at least 90 percent (however, see 2018 Penalty Relief, below) of their taxes throughout the year through withholding, estimated or additional tax payments or a combination of the two. If they don't, they may owe an estimated tax penalty when they file.

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Isn't it 110% of last year or 90% of current year?

100% of PY if your AGI as MFJ is under $150K but I'm assuming we are all TexAgs millionaires.

SweaterVest said:

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The box that indicates my spouse works and makes roughly the same amount I do. Employer withheld as if I was the only income for our family.

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Same here, I've talked to a number of people this happened to this year. Ended up owing 12000

Im not that mad because I would have paid it either way via withholding but still was a kick in the nuts

SweaterVest said:

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Thanks. I guess I can just resolve the difference when I file the return, assuming the IRS has deposited the check by the time I file.

Side question - Doe anyone know if filing a 4669 (employee) and 4670 (employer) will result in waiving any underpayment penalties that would normally be assessed for underpayment over the last year? These are the forms the IRS requires when an employee has submitted a correct W-4 but the employer makes a mistake entering the exemptions in their payroll system.

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Highly recommend against MAILING a check.

You can easily pay online and avoid the risk of your check going unopened for months or being lost. It also avoids the risk of being sent notices by the IRS claiming you owe lack when in actuality they haven't gotten around to opening your check.

Below is the web link for making estimated tax payments online. Be sure to credit your payment towards the 2022 tax year and not 2023.

https://www.irs.gov/payments/direct-pay

That's odd. I had a similar issue this year in that I'm filing an extension, but the accountant said to hold off on payment owed. We meet Monday so guessing that's why she's having me hold off before having me pay.

My accountant forgot to account for my child last minute, which swung it a few thousand. Big mistake. We still owe $6k even though we both file single and zero dependents with paycheck. Just want to verify nothing else is incorrect.

Does the IRS intentionally make the estimated tax penalty calculation vague?

Four Seasons Landscaping said:

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Does the IRS intentionally make the estimated tax penalty calculation vague?

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Don't know that the IRS does, but the staff working for our elected officials seems to have knack for it. That is how you wind up with a single sentence in the tax code that is 342 words long, longer than the Gettysburg Address.