Q. What's the best and easiest way to calculate Estimated Taxes?
A. Divide last year's tax liability (line 24 of the 2021 form 1040) by 4. That is the amount you need to pay quarterly for 2022.
If you expect to owe less than $1000, at tax time, quarterly estimates are not needed.
End of basic question.
ADDITIONAL INFORMATION
TurboTax (TT) can prepare the quarterly payment vouchers. In your 2021 software, enter at:
Federal Taxes or Personal (H&B version)
-Other Tax Situations
-Other Tax Forms
-Form W-4 and Estimated Taxes - Click the Start or Update button
On the next screen answer No to the W-4 question
You should pay in quarterly estimated taxes if you don't have enough withholding taken out to cover the tax on all your income. You might be able to increase your SSA-1099 withholding, on your SSDI income, to account for the extra income.
You should make estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
- 2. You expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your current year’s tax return, or 100% of the tax shown on your prior year’s tax return. (110% if your income was more than $150K) . Your prior year tax return must cover all 12 months.
If your goal is just to avoid the underpayment penalty, then paying 100% of the prior year tax liability is the “safe haven”
