Short on federal withholding … can I just make a payment to cover it?

Looks like my federal withholding will end up about $1,865 short for the year. To avoid any penalties, can I just make a payment before the end of the year?

Check your payroll portal to see if you can add extra withholding. My employer lets me add a specific amount on top of regular withholding. If you do this through payroll, the IRS counts it as if it was paid throughout the year, even if it’s done toward the end, which helps you avoid penalties or interest. It’s different from paying directly to the IRS as estimated taxes.

@Nico
This is the simplest way. Just remember to switch it back afterward!

You could make an estimated tax payment for Q4, which might reduce any penalties. But you might still get a penalty for quarters 1-3 if you owed over $1,000 for 2023. Filling out a new W-4 to increase withholding could work better, but it depends on how quickly your employer processes the change.

@Bennett
How would the IRS know? If the person paid the full amount now, wouldn’t it just show up as total tax paid when they file? Not a tax expert here, just curious.

Jamie said:
@Bennett
How would the IRS know? If the person paid the full amount now, wouldn’t it just show up as total tax paid when they file? Not a tax expert here, just curious.

The IRS knows because a big Q4 payment stands out if nothing was paid in Q1-3. They assume income comes in evenly over the year, so a Q4-only payment suggests you should have paid each quarter. If the income actually came in during Q4, you’d have to file Schedule AI with Form 2210 to show it wasn’t earned throughout the year.

@Blaire
Got it, thanks for the clear explanation!

> My federal withholding is on track to be $1,865 short for the year.

Is your total tax bill going to be at least $18,650? If so, you might not need to do anything, since being under by less than 10% is considered safe harbor.

Thanks, everyone! I’m going to increase withholding through my paycheck. Appreciate the quick responses!

Probably not. It needs to be paid evenly throughout the year to avoid penalties. You could try updating your W-4 to increase withholding for the next few paychecks. Another option is withdrawing the $1,865 from an IRA, having it all withheld for taxes, and then putting it back within 60 days.

@Val
Not exactly—if you set up extra withholding through payroll, it’s treated as if it was paid evenly throughout the year.

Marley said:
@Val
Not exactly—if you set up extra withholding through payroll, it’s treated as if it was paid evenly throughout the year.

Yeah, through your W-4.

Val said:

Marley said:
@Val
Not exactly—if you set up extra withholding through payroll, it’s treated as if it was paid evenly throughout the year.

Yeah, through your W-4.

>To avoid penalties, can I just make a payment before the end of the year?

And you said “probably not,” but actually, yes, you can. Are you sure you’re a CPA? Why suggest upping withholdings instead of just doing extra payroll tax? This makes me question your “credentials.”

@Marley
When people say “make a payment,” it usually means an estimated payment. Withholding is generally considered different. An estimated payment won’t solve the issue here since it’s late for Q1-3.

The misunderstanding here seems to be on your end, not the original commenter. They correctly pointed out that withholding is what needs to be adjusted, not a late estimated payment.