We pay estimated taxes every year. As I understand the IRS rules, we can pay the prior year tax or estimate your current year income and pay at least 90% of that amount. I blindly accepted TurboTax suggestion last year which caused a bit of overpayment. Before using TurboTax, I simply would use my prior year tax as my current year estimate. TurboTax calculates a number that is greater than the prior year tax, at least for my case for the 2023 and 2024 tax years. How does TT calculate the estimated taxes for the current year when it does so as part of the tax filing?
Not using real numbers, but let’s assume I paid $50,000 in taxes for 2023. I would assume 4 payments of $12,500 ($50,000/4) but TT is generating a higher number akin to $13,500 which totals $54,000. I know I can do my own calcs but just wanted to know the basis for TT calcs.
