Estimating next years taxes using this years numbers. Why would tax due be different?

[SteveKoz]

Plan on doing IRA rollovers in 2025.  Want to make sure we pay enough in estimated taxes.  I filled out all of our 2024 tax return and then made a duplicate return to play with.  In the duplicate I added in a fake 1099R for $230,000 and completed the return.  This was to mimic what we plan on having in 2025.   I then went into the Estimator to figure out how much we would need to pay each quarter.   Since we already added in the fake 235,000 in for 2024,  in the estimated under 2024 the numbers were already supplied.   I copied the same numbers in under the 2025 column.  2024 column matches 2025 column through out the estimator process.  When I get to the end it says based on my entries it estimated my 2025 taxable income to be $2,450 LESS than my 2024 income.  It gives me the actual numbers but they are $2450 less so my total tax due is $929 less.   How can this be?  I called TT support and they say they have no reported problems on this and it's working properly..Not giving an error.  Suggested I pay for Live Tax Advice.   This seems like a pretty simple process.  Any idea what I could be doing wrong?  Shouldn't these numbers at the end of the estimator process be the same if I entered the same numbers in both columns?   Appreciate the help!  Thanks

[DianeW777]

it depends on many things. And if I understand what you indicate, your IRAs will be rollovers not part of your income. Regardless, the key to determining your estimated tax amount and making sure you don't have a penalty for underpayment is to pay enough and, if necessary, pay the balance when you file. Everyone has a different comfort level. You can't go wrong with 110% of your tax for 2024 if  your income is going to be as high as you indicate.

Generally, you can avoid the penalty if your total timely estimated payments and withholdings are greater than or equal to the lesser of:

• 90% of the total tax after credits for the current year, or
• 100% of the total tax after credits in the prior year
• See one exception below.

You can also avoid the penalty if the amount you owe is less than $1,000 as long as any estimated tax payments you made are timely.

Note: High-income taxpayers. If your adjusted gross income (line 11 of your 2024 Form 1040) is greater than $150,000 (or $75,000 if you're married and file a separate return from your spouse), you can avoid a penalty by paying at least 110% of your total tax from the prior year.

Lastly, you can pay your estimated tax online at the link provided: IRS Payments 

[SteveKoz]

Thanks.  Money will be coming from my 401K and rolling into a Roth IRA so it's all taxable income.  I agree I can always pay more than required to avoid a penalty but that's not the solution.  Problem is why the calculator doesn't calculate the same amounts for 2024 and 2025 when both inputs are the same?   Also, I have to fudge my 2025 numbers higher to get the total income for 2025 to match 2024 at the end.  And even when they match at the end, the same taxable income for 2025 and 2024 the taxes dues for 2024 are $245 higher.     This has to be a bug in TT.  How can I trust that TT is giving me the right estimated taxes to pay?