Who is nuts here, Turbo Tax or the IRS?

[howjltx]

Just now after filing my 2019 return where I get $2500 refunded to me,  Turbo tax says I now need to submit four 1040-ES payments each quarter of $1,000 for 2020....WTF?????? 

Last year I did retire and cashed out all my vacation, sick leave for a 30% bump in income (which the company did withhold taxes on this), had a great year in the stock market FINALLY resulting a 20% bump in income (no tax withheld but I did send in more than enough through DirectPay in May 2019 to cover the tax on it) plus after retiring I started a new job where between the two jobs I over paid my FICA tax where I knew to claim the overpayment as a credit for my 2019 Taxes so didn't need to pay another estimated tax. I also started withdrawing my pension without any tax witheld (but on my W-4 at my new job I am/did  widthhold enough to cover the tax) Obviously, since I am getting back  $2500 this year, I keep track of what taxes I will owe and even pay additional estimated taxes so not to get penalized.... 

I know I will hear "you should have put the $2500 refund towards my 2020 taxes", AND TURBO TAX SHOULD HAVE RECOGNIZED THIS AND WARNED ME BEFORE I SUBMITED MY 1040. But the truth is, my income will be no where close to last years and I am still withhold enough from my current job to pay taxes on my retirement where I already lost big on the CV-19 market crash so I will not need to make any additonal estimated tax payment for 2020 for capital gains....

So my question is should I ignore the $1,000 per quarter payment OR make the stupid payment along with reducing my additional tax withholding from my current job?  (Although I am tempted to just pay both since the IRS pays better intrest rates than any bank - it justifies them charging under-tax-payers higher intrest rates for not paying in enough)!

[fanfare]

Ignore those 1040-ES vouchers.

AND, besides,

you don't get interest on estimated tax payments.

[Hal_Al · Accepted solution]

Q. Should I ignore the $1,000 per quarter payment?

A. Yes.  TurboTax's calculation of estimated taxes is only a "suggestion". It is not required.

You should pay in quarterly estimated taxes if you don't have enough withholding taken out to cover the tax on all your income. You might be able to increase your W2 withholding, at your regular job, to account for any extra income.
You should make estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
- 2. You expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your current year’s tax return, or  100% of the tax shown on your prior year’s tax return. 

If your goal is just to avoid the underpayment penalty, then paying 100% of the prior year tax liability is the “safe haven”.

As others have said, the IRS does not pay  interest on estimated payments, even if you get it all back.