Estimated Tax Payments Deduction - Local Estimated Tax?

[Dodge222]

Hello,

Trying to complete my federal return as an independent contractor.

In the deduction section, turbo tax is asking me  how much I paid for "local estimated tax in 2023".

This is the first time I encounter the term "local estimated tax", and after some digging on COPILOT (GPT-4 chat), this is the answer it gave me

" Local estimated taxes are indeed payments made to the IRS, not local governments. These payments help cover your tax liability when your income isn’t subject to federal withholding"

"Local estimated taxes are indeed part of the broader federal estimated tax picture. When you make estimated tax payments, they encompass both federal and local tax obligations"

Is AI's statement true? If it is part of federal estimated tax, why is turbo-tax asking me how much I paid for local estimated tax. Should I just ignore it and leave it blank?

[Mike9241]

when Turbotax asks about local estimated taxes it's referring to estimated income tax payments below the state level - an income tax district within a state.  for example, NY state has an income tax. that is not a local income tax. New York City has an income tax so estimated tax payments to it would be local estimated tax payments.  Some cities may have their own income tax subdivision. 

[Dodge222]

So there really is local estimate tax that I need to pay separately?

When I filed last year, how come turbo tax did not mention it?

It only gave me voucher for Federal and State estimated tax

[MonikaK1]

Some cities, school districts, or other local governmental units have taxes that are often reported through the state tax return. If you work in one of these areas, the local taxes may be withheld and shown on your W-2 in boxes 19 and 20.

If you paid any local estimated taxes, you can enter them in the Federal section of TurboTax as a deduction. 

They are not paid to the IRS.

If you don't live or work in an area that has local taxes paid through the tax return, you don't need to enter anything in local estimated taxes. Many jurisdictions support schools or other local government activities with sales tax and property tax.

See this help article for more information about state and local tax deductions.

Please see this article for more information about city and local tax returns that are supported by TurboTax.