Yes, When you prepare your taxes, TurboTax can also automatically calculate your estimated tax payments and print out payment vouchers for you to send to the IRS. You can also use TurboTax TaxCaster to get an estimate of your overall tax picture and if you should make an estimated tax payment.
TurboTax will guide you through this process.
I would recommend TurboTax Home and Business, however you can start with any version and upgrade when necessary.
Generally speaking, anyone who owes more than $1,000 in a given tax year, after subtracting withholding and refundable credits, is required to pay quarterly estimated taxes. Traditionally this applied to high income taxpayers because of revenues from sources such as interest, dividends or rent.
Salaried individuals and those paid hourly wages typically do not pay estimated taxes. Their federal income taxes are withheld from their wages throughout the year by their employers.
Self-employed individuals, however, are solely responsible for ensuring that their federal income taxes are paid at the right time.
How to pay
The IRS requires that individuals estimate what their total income tax for the year will be and divide it into four equal installments. The installments must be paid on:
- April 15
- June 15
- Sept. 15 and
- Jan. 15, unless the 15th falls on a weekend or federal holiday, in which case the due date becomes the first business day following the 15th.
To avoid penalties, the payment—by check or money order accompanied by the correct IRS voucher—must be postmarked by the due date. Or, online payments can be made without a voucher.
For example, if you miss it by one day, you'll get a penalty. If you’re out of the country and your flight gets delayed a day ... and you miss the deadline, you get penalized.
Estimating estimated taxes
When attempting to estimate your income tax for the year ahead, you are predicting the future. If you underestimate, you may be penalized for the number of days it remains unpaid. The simple way to ensure that you pay what you owe is to pay at least 100% of the tax you paid the previous year, unless you have some indication you are going to earn significantly less.
If you think you are going to make less, calculate about how much and try to pay 90%. If you pay 90%, and still owe a little more at the end of the year, that’s OK.
There are "safe harbor payments"—a payment that ensures you will not be penalized. For example:
- If you are married, filing jointly and your adjusted gross income is below $150,000, you may make a payment equal to 100% of what you paid in income taxes the previous year or 90% of the tax you estimate for the current year.
- Taxpayers whose adjusted gross income is $150,000 or more must make a payment equal to 110% of the previous year’s taxes or 90% of the tax for the current year.
In either case, you will still owe taxes at the end of the year, but you will not face penalties and interest.
The IRS provides a worksheet for Form 1040 ES. It instructs taxpayers how to estimate their taxes.
