Can I make a payment now for Federal taxes that might be owed in 2021?

[streetwolf]

My wife retired in Jan 2021.  I've been retired for a few years.  Our income is mostly from Social Security now.  My wife had about $7000 in gross income in January of 2021 as she worked for about 3 weeks prior to retirement.  I have a small pension of about $2000 per year.

Having a lower income I decided not to have Federal taxes deducted from our SS payments.  After reading up on my situation I think I might owe more Federal taxes for 2021 that were withheld.  Not wanting to run afoul of the greater than $999.00 limit on what I owe in taxes I want to make a payment to the IRS now for 2021.

I see there are online payment options on the IRS site. Are any of these what I want?  The bottom line is that I hopefully come in under the $1000.00 limit.

A link to whatever I need to do to accomplish this would be greatly appreciated.

[fanfare · Accepted solution]

on the IRS Direct Pay page, select "Estimated Tax"

[streetwolf]

Will I receive a form from the IRS acknowledging the estimated tax I paid so I can add it to taxes paid on my 2021 Form 1040?  Is there a separate line for this on the 1040 or perhaps a Schedule?  I never did this sort of thing before.

[DoninGA]

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@streetwolf wrote:

Will I receive a form from the IRS acknowledging the estimated tax I paid so I can add it to taxes paid on my 2021 Form 1040?  Is there a separate line for this on the 1040 or perhaps a Schedule?  I never did this sort of thing before.

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If you use the IRS website to pay estimated taxes you will receive a confirmation number for the payment.  The IRS does not send you any type of form for the payment you made.

You report the estimated tax payments made in 2021 on the 2021 tax return you file next year.

[streetwolf]

Thanks for you help.

[streetwolf]

I just installed TT2021.  Where exactly do I enter the payment I made at the IRS Direct Pay site?  I do have the confirmation number for the payment.

[DoninGA · Accepted solution]

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@streetwolf wrote:

I just installed TT2021.  Where exactly do I enter the payment I made at the IRS Direct Pay site?  I do have the confirmation number for the payment.

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To enter, edit or delete estimated taxes paid (Federal, State, Local) -

• Click on Federal Taxes (Personal using Home and Business)
• Click on Deductions and Credits
• Click on I'll choose what I work on (if shown)
• Scroll down to Estimates and Other Taxes Paid
• On Estimates, click on the start or update button

Or enter estimates paid in the Search box located in the upper right of the online program screen. Click on Jump to estimates paid

[streetwolf]

Thanks.  Will this trigger a letter from the IRS?  Do I have to enter the confirmation somewhere?

[DoninGA]

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@streetwolf wrote:

Thanks.  Will this trigger a letter from the IRS?  Do I have to enter the confirmation somewhere?

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No it will not trigger an IRS letter.  Millions of taxpayers pay estimated taxes each year.  The IRS knows you paid estimated taxes so there is no need for your confirmation number on the tax return.

[DoninGA]

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@streetwolf wrote:

Thanks.  Will this trigger a letter from the IRS?  Do I have to enter the confirmation somewhere?

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We are referring to an estimated tax payment, correct?  Not a payment for taxes owed on a prior year tax return?

[streetwolf]

This isn't estimated taxes because I owed a $1,000.00 or more in 2020.  I am retired and my my wife retired in Feb. of 2021.  We downsized and I am not sure what my tax liability will be.  Our income now consists of Social Security and some dividends.  I paid $3,000.00 dollars in advance to ward of having to pay estimated taxes in 2022.  I might even make another payment by 1/18/2022 if I get enough forms to see what I may owe.  I was told in a previous reply that I can make this kind of payment.

So it isn't estimated taxes per se.  I only see a place to enter it as estimated taxes.  Should I be entering it somewhere else.  Btw.. I am using TT2021 Premier on Windows.

After I complete my 2021 taxes I will have a better idea how much withholding taxes I should have taken out of our SS benefits if any.

[DoninGA]

@streetwolf Those would be estimated tax payments if paid in 2021 for your 2021 tax return.  You can make estimated 2021 tax payments for fourth quarter 2021 at any time on or before January 18, 2022.

If you paid $1,000 for taxes owed on the 2020 tax return that payment is not entered on a 2021 tax return.

[VolvoGirl]

Why do you think it's not a estimated payment?   How did you pay it?   If you didn't pay it as a estimated payment with a 1040ES form or select 2021 1040ES when paying the IRS online they might not apply it right to your 2021 return.

Estimated payments are any payments you make that are not withholding from W2 and 1099.

[streetwolf]

As mentioned I paid the $3,000.00 because our income has changed significantly.  It was done to ward of having to pay estimated taxes as determined by TT if I owe $1,000 or more.  The bottom line then is that my payment is still an estimated tax computed by me and not TT.  Correct?

[DoninGA]

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@streetwolf wrote:

As mentioned I paid the $3,000.00 because our income has changed significantly.  It was done to ward of having to pay estimated taxes as determined by TT if I owe $1,000 or more.  The bottom line then is that my payment is still an estimated tax computed by me and not TT.  Correct?

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You are correct.