Edit - I think I made the mistake. I took the $1,975 amount was from line 23 on form 1040. But it appears that the estimated taxes are calculated from the result of line 16 minus line 17 which then comes out to $5,087 and divided by 4 is $1,272.

Follow up question - we had a couple extra income situations in 2019 that were a one time thing that will not happen in 2020. Is it possible to calculate the 2020 estimated taxes without those situations to come up with a more true quarterly payment?

Thanks again.

Yes, you can calculated your 2020 Estimated Taxes using amounts that more accurately reflect what your income will be.

Type '1040-es' in the Search area, then click on 'Jump to 1040-es'. 

Click this link for instructions on How to Calculate Estimated Taxes.

I was able to go through the 1040-es in TT as suggested and after entering all the estimated information for 2020, it calculated updated estimated payments (four equal payments). I then realized that it may be more beneficial for me to use the annualization method for 2020 since my self-employed income varies from month to month.  

Is it possible to calculate 2020 estimated taxes using the annualization method in TT? Or does the 1040-es as suggested already take care of that? I was just under the impression that since my income varied, the estimated payments would be different each quarter.

Thanks again.

Hi. 

Hope it's ok for me to ask a question on this topic since it's related to the original question (rather than creating a new thread).

I owed $1755.00 in taxes for 2019 when I filed, so I was expecting that is what would be used for calculating the estimated tax payments, however the quarterly estimated tax payments determine in TT was $795 per quarter.  I guess there is some calculation based on total tax owed, amount of tax paid that goes into figuring out the estimated quarterly calculations.  Total tax owed in 2019 was $6592 with $4837 being paid during the year.

I saw the comment about filling out a new form to calculate a different value, but if my income is variable due to independent work, if I were to fill out that form to come up with a lower quarterly estimate but then owed more than $1000.00 next year I would be hit with interest and penalties . . .  I guess I should have looked at my quarterly estimates before submitting my return earlier as if I wanted to change the amount required I would have to had to do that calculation before submitting my return  (had to submit on May 1 due to State filing requirements)

 I'm assuming I'm stuck with making the first 3 quarterly payments as calculated in my return and then for the 4th quarter make some decision based on my income for the year whether or not I need to bother making the 4th quarterly payment in Jan 2021

Does this sound accurate?

Thanks!

The amounts that TurboTax prints on the four 1040-ES forms are just estimates - you can change the dollar amounts on any or all of them when you pay.

Yes, if you look at the instructions for the 1040-ES, you will see all sorts of calculations for determining your annual estimated tax and your quarterly estimated tax.

When I was a contractor, I found it easiest to 

• Look at my previous year annual gross income for Schedule C
• Look at my tax on that income
• Create a ratio of tax to gross income, (say 25%)
• In the current year, set aside for each billing the income amount times this ratio into a separate account
• Each quarter, go into the account and make an estimated tax payment from whatever was in the account

In this way, your quarterly estimated tax payments rise and fall with your gross business income

In my case, I used 25%, but it will vary a lot based on the percent of expenses in your business (i.e., the ratio of gross income to net income), whether or not you are also an employee and doing withholding on a W-2, whether or not you have a spouse working, etc.

This worked for me; see what works for you.

Thanks BillM,

So did you actually use that form to generate a new calculation when you filed your taxes?

I didn't catch this and already filed with the generated forms, so I'm assuming I'm stuck with that value unless I file an amended return with a new version of that form . . . .  which I don't think I want to deal with at this point. 

Thanks!

Richard.

Hi Again BillM223

I re-read your response and the first comment you made I apparently didn't quite get the first read.

So are you saying those are "just suggestions" and I don't have to file a different form to pay a different amount each quarter?

Thanks!

Right the four 1040ES are optional to pay.  The 1040ES quarterly estimated tax payments DO NOT get sent to the IRS or state with your return.  Turbo Tax is very conservative and doesn't want you to owe too much next year. They might have printed out if you got a one time large income this year. Like if you took a IRA or 401K distribution. You can ignore them. You might want to adjust your withholding at work so you won't owe too much next year. 

You can cross out the amount and write in another amount.  Or you can go back into your return (Click on Add a State to let you back into your return) and recalculate them.

You can figure the estimates by going to
Federal Taxes or Personal (Home & Business program)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button