Understanding estimated tax requirements - are we forced to overpay taxes next year if we underpaid this year?

Hey everyone, I'm prepping our taxes and just found out we owe around $9,300 because we didn't pay taxes when we cashed out some investments last year. Now H&R Block is telling us we need to pay this same amount in estimated taxes for the upcoming year. The thing is, we definitely learned our lesson and won't be selling any stocks this year, so it feels like we'd just be giving the government a $9k interest-free loan for no reason. We've always gotten refunds before, never owed anything. So my question is - are we actually legally required to make these estimated tax payments for next year even though our situation will be completely different? Does the IRS force you to overpay based on a one-time mistake?

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18 comments

Brandon Parker

•8M

You're facing what many people discover about estimated taxes. Here's the simple explanation: The IRS has a "safe harbor" rule. To avoid penalties, you need to pay at least 90% of the current year's tax OR 100% of last year's tax (110% if your AGI was over $150,000). So no, you're not legally required to pay the exact same amount as your unexpected tax bill. You have options: 1. If your regular withholding from paychecks will cover at least 100% of last year's total tax (including that stock sale), you don't need to make additional estimated payments. 2. If you can reasonably estimate this year's tax will be much lower (no stock sales), you can pay 90% of that estimated amount through withholding or quarterly payments. Just be aware that if you choose option 2 and end up owing more than $1,000 at tax time, you might face underpayment penalties if you didn't meet one of the safe harbor rules.

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Brandon Parker

•8M

Yes, you've got it right. You can adjust your W-4 withholding to cover 100% of last year's total tax (including that stock sale). This is the safest approach and guarantees no penalties. Or you can pay 90% of this year's expected tax if you're confident you won't have similar investment income. This approach requires more careful planning and estimation of your 2025 tax situation. If you miscalculate and end up owing more than $1,000 when you file next year, you could face underpayment penalties if you didn't meet the safe harbor rule.

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Adriana Cohn

•8M

After dealing with a similar situation (unexpected capital gains), I found this amazing tool called taxr.ai (https://taxr.ai) that analyzes your tax documents and helps predict your tax liability. It saved me so much stress! I uploaded my statements, and it flagged potential tax issues before they became problems. It also helped me figure out exactly how much I needed to pay in estimated taxes based on my specific situation - not just the generic "safe harbor" calculation. It actually showed me that I could reduce my quarterly payments significantly because my situation was changing.

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Adriana Cohn

•8M

It definitely works for self-employed people. It analyzes your income patterns and helps determine appropriate estimated tax payments based on your projected earnings. It's especially helpful with fluctuating income because it can adjust your estimated payment amounts quarterly. For your question about how it's different - it's more proactive than reactive. TurboTax mainly tells you what you owed after the fact. This analyzes your current financial situation and makes projections. It considers both federal and state tax requirements and can even identify specific deductions you might be missing based on your profession and income sources.

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Melody Miles

•8M

I wanted to follow up about taxr.ai - I decided to try it despite my skepticism, and I'm actually impressed. I uploaded my documents from last year where I had a similar situation with unexpected capital gains, and it clearly showed me I only needed to make about 40% of the estimated payments that TurboTax was suggesting. It explained exactly why - my withholding from my regular job already covered a significant portion of what I needed for the safe harbor rule. Saved me from overpaying by thousands. It also suggested a specific withholding adjustment I could make instead of quarterly payments. Way more helpful than I expected!

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Nathaniel Mikhaylov

•8M

If you're struggling to figure out your exact tax situation, you might want to try Claimyr (https://claimyr.com). I used it to get through to an actual IRS agent who explained my estimated tax requirements. I was in the same boat - sold some crypto and got hit with a huge tax bill. The IRS website was confusing, and I spent HOURS trying to call them directly with no luck. Claimyr got me connected to a real person at the IRS in about 15 minutes who walked me through my specific situation. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed I didn't need to make the full estimated payments since my situation was changing, and explained exactly what I needed to do to avoid penalties. Saved me a lot of money and stress!

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Nathaniel Mikhaylov

•8M

It uses a system that navigates the IRS phone tree and waits on hold for you. When an agent picks up, you get a call connecting you directly to them. It literally calls you when there's a human on the line. As for the skepticism, I was exactly the same way. I thought it was too good to be true. But it's just using technology to handle the hold time instead of you having to wait on the phone yourself. The time it saved me was worth every penny since I was able to get direct answers about my specific tax situation instead of guessing.

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Kristian Bishop

•8M

I hate to admit when I'm wrong, but I have to follow up about Claimyr. After my skeptical comment, I decided to try it this morning because I was desperate for answers about my own estimated tax situation. It actually worked exactly as described. I got a call back in about 30 minutes with an IRS representative on the line. The agent confirmed that because my situation this year will be different from last year (no unusual income), I can either: 1) pay 100% of last year's tax through withholding/estimated payments or 2) pay 90% of this year's expected tax. She even walked me through how to calculate the minimum I needed to pay each quarter to avoid penalties. Definitely saved me from overpaying by thousands. And saved me the 2+ hours I would have spent on hold.

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Kaitlyn Otto

•8M

Something important that hasn't been mentioned yet - if your AGI was over $150,000 last year, the safe harbor jumps from 100% to 110% of last year's tax liability. So if that stock sale pushed you over that threshold, you'd need to pay even more in estimated taxes to guarantee no penalty. One strategy to consider: increase your withholding toward the end of the year if needed. The IRS considers withholding to happen evenly throughout the year even if it didn't. So you could wait until Q4 to see where you stand and then adjust your W-4 for the last few paychecks to make up any shortfall.

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Kaitlyn Otto

•8M

Yes, if your AGI was over $150,000 last year, you'd need to cover 110% of your total tax liability (including that $9,300) to guarantee no underpayment penalty. But that's only if you're using the "prior year tax" safe harbor method. The withholding strategy is a great safety net. Unlike estimated payments which must be made quarterly in the correct amounts, the IRS treats withholding as if it occurred evenly throughout the year regardless of when it actually happened. So increasing your withholding in November/December can retroactively cover your requirements for the entire year. It's a completely legitimate way to avoid penalties if you realize late in the year that you might come up short.

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