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How can you "expect" to know if you need to pay quarterly taxes? I am on a university fellowship where there is no withholding. I am married, filing jointly. To file quarterly, my understanding from a previous question here is that I need to expect to owe at least $1000 for 2023. If I don't know this per se but end up owing more than that, will I still be penalized with late fees for not having filed quarterly in the first place?

And if I do file quarterly, what documentation do I need? My wife receives her W2 only once per year along with our 1099-INTs, and I receive no tax forms from my university documenting my fellowship (this seems strange, but I have checked this multiple times with them). We are both US citizens, if that matters.

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    You don't file a complete return, you go through the 1040-ES form to "guesstimate" how much tax you may owe, send in quarterly payments, and by April of 2024 file a complete 1040 return and either owe a bit or get some back...
    – Jon Custer
    May 30 at 22:16
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    Pay the amount with the remaining 'quarterly' payments and all is good... And, if your state has income tax, yes, they most likely would want it as well...
    – Jon Custer
    May 30 at 22:23
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    tax liability is your "total tax" line
    – littleadv
    May 30 at 23:15
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    (@JonCuster) Note 'quarterly' is April 15, June 15, Sept. 15, Jan. 15 -- not equal quarters. OP: if you do end up needing estimated payments (tax less withholding and credits > 1k) and didn't pay Q1 timely you will owe a penalty for the underpaid portion and time. Example: if your taxable income will be $50k and tax $5560, and your wife's withholding covers half of it, your required Q1 payment was $625. If you pay that today (which you can) it is 45 days late, so the penalty will be about five dollars. Which they may waive -- just sending a collection letter costs them almost that much.
    – dave_thompson_085
    May 31 at 2:32
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    @dave_thompson_085 - indeed. Also one could just increase the wife's withholding to cover the entire anticipated tax bill, and make no quarterly payments. Easier to budget for as well.
    – Jon Custer
    May 31 at 12:27

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In the previous question I provided the link to the IRS estimated payments calculator. You can use it to make the calculations that you need. Generally, you should have at least a rough idea of what your income is, but there are special cases for folks with unpredictable income patters (and yes, you can pay different amounts in different quarters, depending on your income patterns).

To pay the estimated taxes you'll use the form 1040ES. You then report the paid amounts on your annual 1040. There's no documentation necessary, however if you end up not paying enough estimated taxes or withholding you may be subject to the underpayment penalty.

W2 is legally required because of the FICA/income tax withholding requirements. Since there are no withholding requirements for the fellowship, you're not getting any "tax" document. You are still getting payslips/have deposit records or have some other documentation about your fellowship, so you can use this as your reference.

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  • Or there's a 'safe harbor' -- if predicting what your income and tax will be for this year is too hard, you can make estimated payments equalling 100% of your liability for last year (110% if AGI above $150k) and even if you end up next April owing more in tax there will be no 'underpayment' (form 2210) penalty -- only the tax.
    – dave_thompson_085
    May 31 at 2:34

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