You can calculate estimated tax payments and vouchers once you have completed your return. You will use the 1040-ES worksheet and payment vouchers and once completed, they will print with your return. You can enter "1040-ES" or "2021 estimated payments" in the search bar in the return.
Our tax system is a "this is a "pay-as-you-go" tax system.
You are expected to pay taxes (withholding) on the income as you earn it throughout the year. That applies to both IRS and CA FTB.
General Rule
In most cases, you must pay estimated tax for 2021 if both of the following apply.
1. You expect to owe at least $1,000 in tax for 2021, after subtracting your withholding and refundable credits.
2. You expect your withholding and refundable credits to be less than the smaller of:
- a. 90% of the tax to be shown on your 2021 tax return, or
- b. 100% of the tax shown on your 2020 tax return. Your 2020 tax return must cover all 12 months.
Note.
These percentages may be different if you are a farmer, fisherman, or higher income taxpayer.
Exception. You don’t have to pay estimated tax for 2021 if you were a U.S. citizen or resident alien for all of 2020 and you had no tax liability for the full 12-month 2020 tax year. You had no tax liability for 2020 if your total tax was zero or you didn’t have to file an income tax return.
Higher income taxpayers.
If your adjusted gross income (AGI) for 2020 was more than $150,000 ($75,000 if your filing status for 2021 is married filing separately), substitute 110% for 100% in (2b) under General Rule, earlier. This rule doesn’t apply to farmers or fishermen.
In order to get as close as you can to paying in the correct amount of estimated tax payments for 2021, you can completed the 1040-ES worksheet in the estimated payments section of the return, You can either enter your total income and estimate taxes on capital gains the same as your ordinary income or you can go line by line and estimate the total income without the capital gains and then, on line 10 of the worksheet enter your estimated capital gains tax for 2021.
You can complete it as specific or as general as you want.
Then, the software will calculate the taxes paid evenly throughout the year, and if you make that choice in next year's return, you should be close. Otherwise, you could manually make copies of the 1040-ES worksheet and complete one for each quarter and that way you can build it in as you will be earning it.
For additional information, please refer to the following link:
IRS Instructions for Form 1040-ES
You can use these same steps with the CA FTB estimated taxes:
Please refer to the following link for the CA instructions for 540-ES, estimated payment vouchers:
CA FTB Instructions for 540-ES
