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jpconrad
Returning Member

Estimating Taxes

What is the best tool for estimating tax liability in the current year?  I know I can make payments based on the prior year, but since my income varies widely from year to year (primarily investment income), I want to have a good handle on what I owe not only for paying the estimated taxes but also to optimize my ordinary income vs. capital gains at year end.

2 Replies
STaxLady
Employee Tax Expert

Estimating Taxes

@jpconrad 

 

TaxCaster, by TurboTax is a great tool for estimating tax liability or refund. You can get to it by clicking on the following link:

 

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

 

Best Regards,

STaxLady

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JaredS_CPA
Employee Tax & Finance Expert

Estimating Taxes

Hello @jpconrad,

Thank you for participating in the Ask the Expert event. As to your question, aside from creating a very involved spreadsheet, I think the best tool is to download TurboTax Desktop and create a new return using 2020 as a guide. Not much has changed for 2021, so 2020 will give a good estimate because 2021 software will not be available until later this year. If you paid for TurboTax Online for 2020, you can call to see if we are able to push a download to you at no cost and then you can also use your 2020 file as a starting point to play around with for 2021.

 

Besides that, you can either hire a tax professional who can use their software to make projections for you or you can visit the IRS website for Publication 505, which will walk you through how to do it. It's a pretty lengthy document, so probably not something you would be interested in unless you are a nerd like me and like that stuff. 🙂

 

Good luck.

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