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I had an elderly client, gone these many years now. He had interest from a dozen or more different banks every year, chasing interest on 1-year CDs. His great joy and glee in life was calculating (by hand on paper!), and paying, his estimated taxes such that he owed less than $25 in April, each to the state and the IRS. But always he wanted to owe and never overpay into refund. I got a real kick out of him and he (and his wife) were lovely to work with.

I'm sure many of you have heard the same story. Some clients ALWAYS have to pay...never get a refund. Client speaks up with an air of genius: "I don't want to let the gubbermint use my money interest free for a whole year, so I keep the money for myself." As if we should admire him for his financial prowess. Funny, I've never had a single one of these "genius" clients have any interest income to report. I believe the threshold for a bank to issue a 1099-INT is only $10. Go figure...

don't know if anyone else has experienced this, but I had a number of clients in the past two years whose wage withholding dropped and they told me they didn't change anything at work. Not knowing what their payroll department is up to, I usually advise an additional $ amount based on how often they are paid, rather than try to rework a W-4. for retirees who owe, I usually print out a W-4V for them to file with Social Security. Although not ideal (often 12% is too little and 22% is overkill), it is an easy method of getting more withheld. The State of Florida used to have a surprisingly simple W-4P form but that went by the wayside. But sometimes all we can do is point out how much they are paying in interest and that it is currently at 8%. You can lead a horse to water...

I had a self-employed client who owed in the five digits every year. The first time I prepared his return I dreaded telling him he owed something like $20k. He didn't even flinch. He said he makes better use of that money in his business during the year and the profits more than make up for the interest and penalty. He had figured out what was best for him. I like Dennis's idea of having all the withholding in December. For clients who take their IRA distributions in December, they could have their year's taxes withheld and not bother with estimates. Now that banks actually pay decent interest, putting the estimate money into a savings account could yield some profit. I usually pay all of my estimates at once in April since I make most of my income in the first quarter and have the cash. I might rethink that strategy.

Reimbursements of actual expenses are not taxable. You'll get a 1099-LTC with Box 3 indicating that the amounts were reimbursed expenses. You'll file Form 8853 showing nothing is taxable. But if they are paid on a per diem basis, Box 3 will indicate per diem and any amounts in excess of the actual expenses OR an excluded minimum are taxable. The excluded amount changes each year and can go up or down ($390 for 2022, $420 for 2023, $410 for 2024). So if the actual expenses amounted to $300/day for 2023, they would only have to pay taxes on payments in excess of $420/day. If actual expenses amounted to $500/day, the excluded amount is irrelevant and they pay taxes on payments in excess of $500/day. (You look at the totals, not the actual per day expenses) Accelerated death benefits from life insurance are reported in Box 2, but are not taxable if terminally ill (otherwise, they are treated as Box 1 amounts and are only taxable to the extent they exceed expenses or the excluded amount).

I make all my tax payments/withholding in Dec. I am within 500 either way. I have interest income. But, a significant % of my income is on Dec. AND I understand the rules, such as withheld on or before Dec. counts for the entire year. Just part of the game we all make money playing. Use/cost of the money has a value even if there is no interest collected as described in the OP. Many fail to account for that.

I have a client who purposely has no Federal taxes withheld so that he can use the money all year. What part of "penalty" don't these people understand?

Double "YEAH!" to everything you both wrote.