I am aware TurboTax isnt forcing me to pay the estimated taxes. I guess my question was mostly around how TurboTax is coming up with those numbers and why they are overstated.
If I paid excess taxes 2022 tax year (due to excess estimated taxes) and if my income 2023 tax year vs income 2022 tax year will be identical to the dollar (which it is actually identical) then shouldn't I take the estimated taxes I paid towards tax year 2022 subtract my refund amount (excess tax payments) and then divide that amount by 4 and use that as my estimated tax amount?
Basic Algebra:
I made 100x in 2022 and paid 10x estimated taxes. I got 2x tax refund. I will make 100x in 2023 and turbotax is suggesting me to pay 12x estimated taxes this year whereas it should be smart enough and suggest to pay 8x instead (because 10x - 2x = 8x). I guess my question is, am I missing something obvious here? Is it simply because the algorithm is extremely naive that it assumes you will make 10-15% more money each year and increases the 1040-ES amount? Why wouldn't it go off your full tax liability of the previous year minus your payments and if there is a refund then lower the 1040-ES amount for the following year?
OR is it because there is some IRS rule and you have to have certain amount of buffer in these estimated tax payments?
