Estimated taxes and $7500 tax credit for electric car

[SueJohnson]

The $7500 tax credit on my 2023 return brought my total tax down to $2182. Turbo Tax said my estimated tax for 4/15/2024 was 1/4 of that or $546 so I paid that. In September for some reason I can't remember I figured out that my estimated tax each quarter should be $1300 so I paid that for the next 3 quarters but did not pay the amount needed to correct for not paying enough in June. Now the IRS has sent me a bill for that difference. My question is WHY was $1300 the correct amount. I am not a high earner so my estimated tax should be 100% of my previous years tax.

[NCperson]

your post is a little confusing to me as it may be confusing the estimated tax with the actual tax.  In the end all that matters is the actual tax.

1) on your 2024 tax return, what is on line 24? this is your total tax. 

2) on your 2024 tax return, what is on line 33.  These are the total payments you made to pay the tax listed on Line 24.   

3) I will assume you correctly listed the estimated payments on Line 26.   I would suggest reviewing this line against your records closely. 

4) If Line 33 is more than Line 24, that determines the refund.  If Line 33 is less than Line 24, that determines what you owe.  

What you paid as 2024 estimated taxes is just a down payment against the tax, but it is important that it was listed correctly on Line 26.  If you over reported this Line, then the "bottom line" of the tax return is incorrect and could cause the IRS to come back to you for the difference. 

[SueJohnson]

I did put the amount on my 2024 tax that I paid as wrong as I thought I had paid $1300 on all 4 estimated tax payments. I don't doubt I owe the difference. What I can't figure out is why the correct amount of estimated tax was $5200.

On my 2023 tax return

line 15 taxable income $111,623

line 16 tax $10,017

line 18 $10,017

line 20 $7,835 with is $7,500 from the electric car credit and $335 from foreign tax credit

line 22 $2,182

line 24 $2,182

[NCperson]

@SueJohnson there really is no such thing as the 'correct' estimated tax.  Rather, to avoid the underpayment penalties, the estimated payments have  to be at least 90% of this years' tax liability (line 24) or 100% of last year's (again, line 24). 

if you can't remember how you determined that $1300 in quarterly payments was better than the $546 Turbo Tax estimated, how are we supposed to figure it out!

at some point past year did you estimate your tax liability for 2024 to be $5200?  What is on line 24 for tax year 2024? 

[SueJohnson]

Line 24 of 2024 tax return was $11,188 but this is not relevant to estimated taxes on my 2023 return for 2024.

In September I did estimate it should be $5200 which is why I started paying $1300.

I was hoping someone was expert  enough on taxes to figure this out.

[NCperson]

@SueJohnson only you can tell this forum how you determined your estimated tax liability would only be $5200. That you estimated your tax liability to be $5200 yet the 2024 tax return shows that the tax is $11,188 is quite relevant. Can you please explain that to us?  

[VolvoGirl]

So how much estimates for 2024 did you actually pay and when?  Because Sept would be the 3rd quarter payment and Jan 15 is the 4th quarter.  So you couldn't have paid 3 payments starting in Sept.  

We don't know why or how you figured your 2024 tax would be 5,200.  Do you have other withholding in addition to the estimates?  And your actual tax or 2023 was 10,017 before the credits and EV credit.  The EV credit was only for 2023 unless you bought another electric car in 2024.  

And Turbo Tax gave you a 4/15/24 estimate 1040ES slip for only $546?  That doesn't sound right at all.  That is 1/4 of  your 2023 tax due payment, not the total tax.  Did you pay the 2023 tax due of $2,182?  Seems like you may have just divided the tax due by  4.   Maybe you thought you were paying the 2023 tax due in 4 payments?    

[SueJohnson]

Sorry. It wasn't September. 5/2/2024 $526, 6/15/2024 $1300, 9/15/2024 $1300, 12/26/2024 $1300.

TurboTax said Estimated payments for 2024 - voucher 1 $546, Voucher 2 $546, Voucher 3 $546, Voucher 4 $546.

I did not need to pay the 2023 tax due of $2,182 because my payment were more than that and I got a refund.

I only bought 1 electric car.

I didn't figure my 2024 tax would be 5,200, TurboTax figured it after I entered everything. This included Schedule E, Schedule 3, Schedule B, Schedule D, Forms 8949, Schedule E, Form 8606, 8995, 8582 and Schedule 1.

Yes my actual tax or 2023 was 10,017 before the credits and EV credit.

[SueJohnson]

I only have to pay estimated taxes on 100% of what I owed the prior year not what my taxes might actually be which is why that is irrelevant.

[VolvoGirl]

OK.  Well we don't know why Turbo Tax only thought the estimates should be 1300 per quarter.  But you can't change the past so you will owe whatever is left to pay.  Nothing  you can do about 2024 now.  Was that your only question...why the estimates were 1300?  Did it figure your 2025 estimates for next year right?   Go though the Estimate section and see if you entered your 2025 income etc. 

Federal Taxes or Personal (Home&Business version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

Say No to W4. When you get to the W4 and Estimated Taxes section, say you want to adjust your income to go though all the screens.

What payment did you make so you got a refund for 2023?  

[SueJohnson]

I figured my 2035 estimated taxes correctly.

TurboTax did not figure out they 2024 estimated taxes should be, I did i June and the IRS did.

I have paid it and that was my only question.