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Business & farm
@ thebreddys wrote:I didn't start earning until Q2, so I assume I have til Jun for my first payment. I will have a predictable first 12 months of earnings so I can estimate my tax accurately. But what I wanted to know is whether Turbotax can help me figure the tax. I am already a Turbotax user so I assumed I could use some additional module or other to do what I need to do.
The first quarter of estimated tax payment for 2021 was due April 15, 2021. Since the IRS figures the penalties on a quarterly basis by default, it's possible when you prepare your return next year, you could have penalty and interest for the first quarter which would continue to accrue (although it may be possible to figure the penalty by a different method that avoids it.) However, there are several ways to figure a penalty including a method to figure it based on income when it was actually received if received unevenly during the year, and also a way to figure it annualizing the income. You could, if desired, still make a payment now which may not avoid a first quarter penalty, but may keep any additional interest from accruing. The TurboTax interview will help you decide what to do. See the steps I provide at the end of this posting.
Also see these 2 TurboTax articles:
Estimated Taxes: How to determine what to pay and when
Estimated Taxes: Common Questions
https://turbotax.intuit.com/tax-tips/small-business-taxes/estimated-taxes-common-questions/L1luHqVdl
And this IRS article on Estimated Taxes:
https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
If more info is needed, the article has a link to IRS Publication 505.
You said you have already filed your 2020 return. Here's how to open your already-filed return back up to go through the estimated taxes interview, calculate estimated tax payments, and print out 2021 Form 1040-ES vouchers, if desired. In another post to follow this one, I'll also tell you how you can pay each quarter electronically instead of mailing a voucher and check.
NOTE: When you open your return back up, do not make any changes in the return itself since it's already been filed. It's OK to go through the estimated taxes interview.
You can go through the section "W-4 and Estimated Taxes" to figure your customized 1040-ES quarterly tax payments for 2021. There is also a place in that interview to enter what you have already paid for 2021 (if applicable), and it will let you include any expected income changes or any other changes you have for 2021.
- Log in, and here's how to open your 2020 return back up:
- At the Tax Home or in the section "Your Tax Returns & Documents" for tax year 2020, look for a link "Add a State."
- Click on "Add a State." (you don't really add one; that's just to get the return to open back up.)
- Once the return is open, click in the left menu column on Federal.
- Then at the top choose tab "Other Tax Situations"
- You may then see a screen "Your uncommon Tax Situations"
- Look for a button to open up "All uncommon situations" to get a list of topics.
- Scroll way down to the last category "Other Tax Forms" and click "Show More."
- Find topic "Form W-4 and Estimated Taxes" and click Start or Update.
- If you need to adjust withholding, go through the W-4 interview.
- If you don't need the W-4 (withholding) interview, you can skip that part and go to the 2021 estimated taxes interview.
- You may get a screen that says "Review your Estimates for 2021?" and asks "Do you want to review your income or deductions". Say YES (or Review Now), so you can get to the additional questions.
- You will go through a lot of screens asking about expected income and deductions.
- Finally, you will come to a screen that says "Enter Payments You Expect to Make."
- There are some boxes there that say "Enter estimated tax payments you've already made for 2021."
- Next screen will ask "which method" to use to calculate your 2021 estimated payments.
- Next screen will ask if you want to print vouchers.
- If you want to pay them electronically instead of mailing the vouchers and payment, see my next posting below.
