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kmd
Level 3

Error in TurboTax calculation of CA 540-ES estimated taxes

I underpaid my California estimated taxes for 2024 because I used TurboTax to generate the estimates, and they were clearly too low, despite the fact that I rounded the estimates up to the nearest $100.  I did *not* have this problem with Federal estimates. 

 

There's a bug in how TurboTax is calculating CA 540-ES.  I am seeing others posting here with this same problem.  Because of this, I received a penalty of $110 from California.  Is this a known problem?  Is anyone working on fixing this?

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1 Reply
kmd
Level 3

Error in TurboTax calculation of CA 540-ES estimated taxes

The problem was that TurboTax defaults to 90% of last year's tax when it should default to 110% when preparing 540-ES estimated tax for next year.  And the IRS rule is as follows:

 

"Individuals who are required to make estimated tax payments, and whose 2023 California adjusted gross income is more than $150,000 (or $75,000 if married/RDP filing separately) must figure estimated tax based on the lesser of 90% of their tax for 2024 or 110% of their tax for 2023 including AMT."

 

TurboTax should be defaulting to 110% of current year when calculating California 540-ES estimated taxes for the next year, not 90%. 

 

TurboTax, please change your default to 110% when calculating 540-ES for California.  I don't understand why the default is 110% for the Federal but not the State.  Why?  Please fix this.

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