If you owe additional tax, you may have to pay estimated taxes for the upcoming tax year.
To see if you have enough withholding through the tax year, you can use this general rule from the IRS as a guide. It will also give you an idea of if you may need to increase the withholding or if you need to make estimated tax payments.
"General Rule. In most cases, you must pay estimated tax for 2022 if both of the following apply:
- You expect to owe at least $500 in tax for 2022, after subtracting your withholding and credits.
- You expect your withholding plus your credits to be less than the smaller of:
- 90% of the tax to be shown on your 2022 tax return, or
- 100% of the tax shown on your 2021 tax return. Your 2020 tax return must cover all 12 months."
Special Rule for Higher Income Taxpayers
If your Alabama AGI for 2021 was more than $150,000 ($75,000 if your filing status for 2022 is Married Filing a Separate Return) substitute 110% for 100% in (2b) under General Rule, above.