Estimated taxes are pre-payments of your tax due. Follow these steps to enter these payments:
- From the Federal menu, click on Deductions & Credits
- Expand the menu for Estimates and Other Taxes Paid
- Click Start/Revisit next to Estimated Tax Payments
- Click Start/Revisit next to Federal estimated taxes for 2019 (Form 1040ES)
- Answer YES to Did you pay federal estimated taxes for 2019?
- Enter the payment information on the screen that follows
To avoid a penalty, you need to make estimated tax payments if you expect to owe $1,000 or more in taxes for the year. The tricky part is estimating income and tax liability before the income is earned, especially for self-employed taxpayers.
If you pay 100% of last year's tax liability (line 16 of your 2019 1040), you can avoid penalties. Simply take the amount from your return, divide by four, and make four equal payments.
However, if your adjusted gross income (AGI) was greater than $150,000, that estimate must be 110% of last year's tax liability.
You can also pay 90% of this year's tax liability to avoid penalties. This is more difficult to estimate, as you need to determine what that amount will be.
Estimated Tax Payments
IRS Estimated Taxes
Estimated Taxes: How to Determine What to Pay and When
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