Why do I have to pay estimated tax if I am retired?

[quantumstar]

I don't know how turbotax calculated that I have to make estimated tax payments, where do I look?

[BillM223]

Generally, you have to make estimated tax payments if your tax due (after withholding and estimate tax payments) was more than $1,000, unless you meet a number of exceptions.

Did you owe tax at the end of your 2019 return? Was it more than $1,000?

When you receive Social Security, do you have withholding done for taxes (honestly, most taxpayers don't). And if your only income is from Social Security, you likely won't owe any taxes.

However, it often happens that a taxpayer takes a modest to large distribution from a retirement fund. This "outside" income is not only taxable, but because of the complex rules on determining how much of your Social Security is taxable, much of your Social Security may now be taxable - up to 85% of it.

Because most retirees are not aware of this potential double whammy, they generally do not withhold enough in the retirement fund distribution (the 1099-R). The result very likely could be that you owed more $1,000 at the end of your return, so TurboTax generated the 1040-ES vouchers for estimated taxes.

Is this necessarily going to happen this year (for tax return 2020)? It depends on the size of any retirement fund distribution. Note that you can increase the amount of withholding on the retirement fund distribution in lieu of doing the 1040-ES vouchers - it doesn't matter to the IRS how they get the taxes.

[will57]

Thank you, now i started receiving a pension from FERS for 240.00 per month. I've yet to withold taxes, i just retired 12/31/2020. will that affect my having to pay SS tax?

[JohnB5677]

Possibly!  Social Security must be posted to your tax return.  It may or may not be taxable based on how much other income you have.

This can be a complicated process,  Social Security benefits may be taxable. 

To find out if their benefits are taxable, taxpayers should:

• Take one half of both of your Social Security money collected during the year and add it to your other income.

Other income includes pensions, wages, interest, dividends and capital gains.

If you are single and that total comes to more than $25,000, then part of their Social Security benefits may be taxable.

If you are married filing jointly, they should take half of their Social Security, plus half of their spouse's Social Security, and add that to all their combined income.

If that total is more than $32,000, then part of their Social Security may be taxable.

 Social Security benefits may be taxable (irs.gov)

@will57