2021 estimated tax

Forum|Forum|5 years ago
March 19, 2021
10 replies
61 views

i applied my 2020 refund as credit to 2021 taxes. am i required to submit a 1040ES form for a quarter in which my estimated tax due is covered by my credit balance for that quarter--i.e. the estimated amount due is $1,500 and i have $3,000 credit available1040ES? Where can i find the rules/procedures governing that situation (it is not discussed in the 1040ES instructions)? thanks for the help.

E-file Status

MaryM428

Level 11

The refund amount will apply to the first estimated payment until all of the refund has been used. So using your refund towards your 2021 taxes means you will not have to make any quarterly payments until the refund amount has been exhausted.

The rule is that you must pay your taxes as you go.

If at filing time, you have not paid enough income taxes through withholding or quarterly estimated payments, you may have to pay a penalty for underpayment.

To determine whether you need to make quarterly estimates, answer these questions:

Do you expect to owe less than $1,000 in taxes for the tax year after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year? If so, you're safe—you don't need to make estimated tax payments.
Do you expect your federal income tax withholding (plus any estimated taxes paid on time) to amount to at least 90 percent of the total tax that you will owe for this tax year? If so, then you're in the clear, and you don't need to make estimated tax payments.
Do you expect that your income tax withholding will be at least 100 percent of the total tax on your previous year's return? Or, if your adjusted gross income (Form 1040, line 8b) on your tax return was over $150,000 ($75,000 if you're married and file separately), do you expect that your income tax withholding will be at least 110 percent of the total tax you owed for the previous year? If so, then you're not required to make estimated tax payments.

If you answered "no" to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the year must satisfy one of the requirements we just covered.

Form 1040-ES

micheleaey

Level 4

Hello, I hope I can ask a question here since I cannot find how to start a new question.

My Schedule C for 2020 taxes is $0 income so turbo tax is saying that I do not have to pay estimated taxes for 2021 using the "prior year exception". I know I am making income this year and have a estimate of owning approximately $1300 in self employment tax at the moment. If I follow the "prior year exception" rule as I have every year for the last 18 years, then I will not pay any estimated taxes during the 4 quarters and just file my taxes next year and pay into the IRS what I owe. I am just nervous not paying anything because I always pay something and don't want the fact I will owe more than the $1000 to come back and bite me.

Am I ok, following what TT is saying and following the "prior year exception" and paying $0 estimated self employment/federal tax for this year?

Thank you

ToddL99

Alumni - Intuit

You are "OK" following TurboTax guidance on the" prior year exception", and would not likely be subject to underpayment penalties. You would still, however, owe tax based on 2021 earnings.

You can use the "Estimated Taxes" interview to update & calculate estimated payments for2021 and generate Forms 1040-ES.

This will help you avoid a tax bill next year.

Enter "estimate in the search box and select "Go to Estimated Tax Payments" from the results. Follow the interview screens to "Review Your Estimates for 2021" and adjust your 2021 income accordingly.

See the following screenshot for aid in navigation: