topic estimated tax voucher in Deductions & credits

estimated tax voucher

busdrvr — Sun, 21 Mar 2021 17:26:48 GMT

when I went to print my federal forms I noticed four 1040-ES " Individual estimated tax voucher" all for approximately $2000. (On My estimated tax due sheet it shows $11,500 in estimated tax for 2021). If my research is correct they want me to pay that because I have a 2020year federal tax payment of $9***. The only reason it was so high is because of a Capital Gains Sale (app$61,000).

1). in 2019 I/we received a tax rebate. (app. $2000).

2). our 2020 earned income was about $7000 LESS than our 2019 earned income.

3). 2019 Total income was $119,*** 2020 Total income is $175*** (again the increase from the sale/capital gains from some investments).

We are not planning any sale/capital gains events for the year 2021.

We Expect our income to be closer to our 2019 tax year income ($119***).

I am worried that if I am "required" to pay the estimated tax It would be difficult AND we would just end up getting it back at the end of 2021anyway????

Am I required to pay the Estimated Tax?

If not how do I tell Turbo Tax and the IRS that I am not going to, so I don't get "in trouble" so to speak?

It is possible that my research MISSED a place where it said paying estimated tax is optional, if so could some one please direct me to that place. I like to make copies of these types of info to access later and to include in my records so I understand three, four, five years from now , how/why I made the decisions I made THANK YOU VERY MUCH!

Re: estimated tax voucher

ToddL99 — Sun, 21 Mar 2021 17:43:50 GMT

You do not have to use the 2021 Form 1040-ES vouchers if your 2021 income is not going to be as high as it was in 2020.

1040-ES vouchers are prepared as a courtesy, based on the assumption that your income and taxes are going to be similar in the next tax year. TurboTax does this to help you avoid future underpayment penalties.

Since you know that won't be the case, you don't need to use them. Just be mindful that your 2021 withholding (or other estimated payments) should be sufficient to meet your 2021 tax liability.

Re: estimated tax voucher

xmasbaby0 — Sun, 21 Mar 2021 17:46:10 GMT

You do not have to tell TurboTax anything about whether you intend to use the 1040ES vouchers. TT never knows how, when or if you paid your tax. You are not required to use those vouchers. They are there in case you need them to avoid an underpayment penalty at tax time next year. if you do not expect to owe more than $1000 at tax time you can pitch them out or shred them if you choose to. Or cross out the amounts printed on them and pay a lower amount if you want. They are optional.

Re: estimated tax voucher

busdrvr — Sun, 21 Mar 2021 19:23:28 GMT

I owe $9***n in tax this year. Again because of a stock sale/capital gains event. That is clearly over the $1000 lower limit that is suggested to generate an "underpayment penalty" Since I did not know/foresee in 2019 that I would be selling stock and owing capital gains in 2020, Will I be charged an underpayment penalty?

Is there any way to avoid an underpayment penalty?