When you pay a 'tax due balance' for Form 1040 or 1040-SR using Direct Pay through the IRS website prior to the due date of the return, say it is April 15, you do not enter this as a separate estimate payment in TurboTax. You may be tempted to enter in the line under the 4 typical estimated quarter payments, but don't enter it there. If you enter it there with a date, say you paid on 4/10, you will receive an IRS letter stating the IRS changed it on your filed return you sent in on or before April 15. Instead, the IRS wants that amount you paid, the balance due that paid already for Form 1040 or 1040-SR, to show up on the tax return on the line below estimated payments, titled: Other forms. For 2023, it was Line 25c.
What is the pathway in TurboTax to get to correct input screen for entering the payment?
1. Deductions and Credits
2. Estimates and Other Taxes Paid
3. Other Income Taxes
4. Other Income Taxes Paid in 202X.
5. Withholding not already entered on a W-2 or 1099.
6. Question: Do you have any tax withholding you haven't entered yet? Answer YES, even though it was a separate payment at the IRS website and not an actual withholding. This is where you need to enter it.
7. Federal withholdings - Amount. Fill in the amount you paid at the Direct Pay - IRS online website.
8. Press Continue.
Congratulations! You avoided the IRS sending you a letter, informing you they adjusted your estimated tax total, since you now correctly have entered it on as separate line item, 25c. It is now included in any W-2 withholdings and 1099s (like 1099-R) total, showing up in Line 25d. Thus, any estimated tax payments and applied amount from prior year return total, Line 26, for 2023 is reflected the IRS requires. By the way, assuming you calculated the balance due correctly and your Direct Pay amount covered you tax bill, you won't owe anything more. Amount due will be stated as $0.00 in the IRS letter you receive if you put the payment in the wrong place.
