Missed Estimated Quarterly Tax Payments - What Should I Do Now?

Don't panic! This happens more often than you think. When you miss estimated tax payments, you might face an underpayment penalty, but it's usually not as scary as it sounds. First, the increased withholding from your paychecks may actually help you quite a bit. The IRS treats withholding as if it occurred evenly throughout the year, even if it was all withheld later in the year. This is different from estimated payments, which need to be made quarterly. You have a few options: 1) Make the missed payments now to stop additional interest from accruing, 2) Wait until filing and pay any penalties then (they're calculated based on how much you underpaid and how long you underpaid), or 3) See if you qualify for any penalty exceptions like if this is your first time or if you paid at least 90% of this year's tax or 100% of last year's tax (110% if your AGI was over $150,000). I'd recommend contacting your CPA to run the numbers and see how much your increased withholding is covering. You might be in better shape than you think!

I was in a similar situation last year and discovered taxr.ai (https://taxr.ai) which honestly saved me so much stress. I uploaded my pay stubs and tax docs, and it analyzed my withholding versus what I should have paid in estimated taxes. It showed me exactly what my potential penalties might be and gave me specific options to minimize them. The withholding calculator they have is especially helpful because it shows how the IRS treats withholding differently than estimated payments (like the previous commenter mentioned). It also helped me create a plan for catching up that my CPA actually approved!

Just wanted to follow up - I tried taxr.ai after posting my question and I'm really impressed! I uploaded my W-2s and my rental property information, and it immediately showed me that I was heading for an underpayment penalty. The visualization of how my withholding was spread throughout the year versus my actual tax liability was super helpful. It recommended specific adjustments to my withholding for the rest of the year that would minimize my penalties. I showed the recommendations to my tax guy and he confirmed they were spot-on! Seriously made me feel so much better about my tax situation and gave me a clear plan going forward.

If you're having trouble figuring out exactly what you owe and you want to talk directly to the IRS about your situation, good luck getting through on the phone! I spent HOURS trying to reach someone at the IRS about my missed estimated payments. Then I found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 15 minutes instead of the usual 2+ hour wait. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent was able to pull up my tax records and tell me exactly what I needed to do about my missed payments, including what forms to file and how to minimize penalties. They even helped me set up a payment plan since I couldn't pay everything at once.

I need to eat my words from my previous comment. After my wife convinced me to try Claimyr (I was super skeptical), I was connected to an IRS agent in about 20 minutes yesterday. The agent pulled up my account and confirmed that my increased withholding had actually covered most of what I would have owed in estimated payments. She calculated my underpayment penalty on the spot - only $127 for missing two quarters' worth of payments - and told me I could request a first-time abatement since I hadn't had any penalties in the past 3 years. I couldn't believe how helpful they were once I actually got through! Would have spent half my day on hold without that service.

Don't forget to check if you qualify for any safe harbor rules! If you pay either 90% of current year tax OR 100% of prior year tax (110% if your AGI was over $150,000), you can avoid the underpayment penalty entirely. Your increased withholding since May might already put you in compliance with these rules.

Has anybody used the Electronic Federal Tax Payment System (EFTPS) for making estimated payments? I just signed up but it says it takes like 5 business days to get the PIN in the mail. Is there a faster way to make these payments if I need to catch up quickly?

Just want to add some reassurance here - I was in almost the exact same situation two years ago. Missed all my quarterly payments due to a miscommunication with my accountant, but had increased withholding midway through the year. The key thing that saved me was that the IRS considers your total tax payments for the year, not just whether you made the quarterly deadlines. Your increased withholding since May is actually working in your favor more than you might realize. I ended up owing a small underpayment penalty (around $200 for the whole year), but it was nowhere near the disaster I thought it would be. The penalty is calculated monthly on the underpaid amount, so even missing several quarters doesn't necessarily mean huge penalties if your withholding caught up later in the year. My advice: Don't make any rushed decisions right now. Have your CPA run the numbers first to see where you actually stand. You might find that between your increased withholding and the safe harbor rules others mentioned, you're in much better shape than you think. Sometimes the stress of thinking you messed up is worse than the actual financial impact!