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Level 2
posted Mar 5, 2021 3:48:21 PM

Calculation for 2021 Federal estimated tax Self Employed

Hi,

 

I follow the trust but verify (also want to understand!) method for turbotax use.   I am working on my estimated taxes for 2021 and I want to basically use the simple 100% (110% for high adjusted gross income) of 2020 tax as a basis for estimating 2021 payments and making sure I don't get any underpayment penalties.

 

Turbotax calculated my 2021 federal estimated for me, but the numbers are way lower than my actual tax payments for 2020.   I'm guessing this has to do with self employment tax as most of my tax liability seems to be the self employment tax?  

 

How do I calculate 110% of my 2020 tax payment for my 2021 estimated payments?   Do I exclude some portion of self employment tax or is there another formula I'm missing or not finding?   Thank you!

 

 

 

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1 Replies
Employee Tax Expert
Mar 10, 2021 1:25:00 PM

TurboTax uses the most recent information when calculating your 2021 estimated taxes. Generally, your estimates must cover the smaller of: 90% of the tax to be shown on your 2021 tax return, or 100% of the tax shown on your 2020 tax return. With that being said, you can always increase your estimated if you think you may have increased self-employment income for 2021. 

 

Please follow these steps to calculate and generate new 1040-ES vouchers: 

  1. With your tax return open, search for 1040-es (be sure to include the dash) and select the Jump to link.
  2. Answer No to the question Do you want to change your W-4 withholdings for 2021?
  3. Answer the questions about things like your 2021 filing status, income, and deductions.
  4. Eventually, you'll come to the Print Vouchers? screen. Answer Yes and we'll include your 2021 1040-ES payment vouchers when you print a copy of your return later.