Can I skip making quarterly tax payments since I've already overpaid for the year?

You're actually fine to skip the remaining quarterly payments if you've genuinely overpaid already. The IRS only penalizes underpayment of estimated taxes, not skipping payments when you've already met your tax obligation. The key is making sure you've truly paid enough. To avoid penalties, you generally need to pay the smaller of: 90% of your current year tax, or 100% of your prior year tax (110% if your AGI was over $150,000). If what you've already paid covers either of these thresholds, you're good to go. Just keep good records of why you made this decision in case questions come up later. And remember this is just for federal - check your state requirements separately as they might differ.

I had this exact same situation last year when I way overestimated my freelance income. I was stressing about it until I found taxr.ai https://taxr.ai and uploaded my previous payments and current projections. Their system analyzed everything and showed me I was already well over the safe harbor amount so I could skip the last two payments. Saved me from tying up cash I needed for other things! They have this feature that lets you plug in different income scenarios to see if you're covered.

Just wanted to update after trying taxr.ai - it was actually really helpful for my situation. I uploaded my payment records and current projection info, and it showed me I was already at 108% of my prior year tax liability, so well within the safe harbor. Ended up skipping my September payment and will probably reduce my January one too. The visualization showing exactly how much buffer I had above the minimum requirement was super clear. Definitely better than the rough calculations I was trying to do on my own!

If you're confident in your math but still nervous, you might want to try getting confirmation directly from the IRS. I used Claimyr https://claimyr.com last tax season when I had a similar question about stopping my estimated payments. They got me connected to an actual IRS agent in about 15 minutes when I'd been trying for days on my own. The agent reviewed my situation and confirmed I could skip the remaining payments without penalty. You can see how it works here: https://youtu.be/_kiP6q8DX5c - seriously saved me hours of frustration.

I have to admit I was super skeptical about Claimyr, but I was desperate after my third attempt waiting on hold with the IRS for over an hour. I finally tried it yesterday and... it actually worked exactly as described. I got a call back when an agent was on the line, and got confirmation that I could reduce my final quarterly payment since I'd already covered most of my tax liability through my early payments. The agent even walked me through calculating the minimum I should pay for Q4 to be safe. Totally worth it just for the stress reduction of having an official answer.

Something nobody's mentioned yet - if you do skip payments, make sure you're accounting for any other income besides investments! I thought I was fine to skip a quarter last year because my freelance work had dried up, but then I forgot about some dividend payments and interest income that pushed me over. Ended up with a small penalty that was super annoying.

Has anyone actually gotten penalized for underpaying estimated taxes? I've been sloppy with mine for years (sometimes I pay, sometimes I forget) and have never had an issue. I always pay everything I owe by April 15th.

I've been in a similar situation and ended up using a combination of approaches. First, I calculated my safe harbor amounts using last year's tax return - if you paid 100% of last year's tax liability (or 110% if your AGI was over $150k), you're generally safe from penalties regardless of what happens with your current year income. But here's what I learned the hard way: don't just assume you're covered based on rough estimates. I thought I was fine until I actually sat down with all my 1099s and realized I had miscalculated my withholdings from my day job. My suggestion would be to do a mid-year tax projection using actual numbers through now, then extrapolate for the rest of the year with conservative estimates. Include ALL income sources - W-2 withholding, estimated payments made so far, dividends, interest, any side income, etc. If that shows you're clearly above the safe harbor thresholds, then you can confidently skip or reduce remaining payments. The peace of mind of knowing for sure is worth the hour it takes to run the numbers properly. Plus, if you do end up with extra withholding, you'll get it back as a refund anyway.

One thing to consider is that the IRS calculates underpayment penalties quarterly, not annually. So even if you end up overpaying for the year overall, you could still get hit with penalties for specific quarters where you underpaid. That said, if you've already made two quarterly payments based on high projections and your actual income is coming in lower, you're probably in good shape. The key is making sure those first two payments, combined with any withholding from other sources, meet the safe harbor requirements Ian mentioned. I'd recommend doing a quick calculation: take your total tax liability from last year, multiply by 100% (or 110% if your AGI was over $150k), and see if what you've already paid this year covers that amount. If yes, you should be fine to skip the remaining payments. If you're close but not quite there, maybe make a smaller payment just to be safe. Also keep in mind that if you do end up with a big refund, you're basically giving the IRS an interest-free loan, so there's definitely value in not overpaying too much.