Estimated CA + Fed quarterly estimated tax calculation incorrect

[ADB4]

I used TT for 2023 and had it calculate my estimated quarterly taxes for Fed and CA based on 100% for the 2024 tax year. My income was almost the same in 2024 as in 2023, yet I owe $3600 in CA and have a $135 penalty. I will receive a $4600 Fed refund. 

My income for both years included a nearly identical Roth conversion at the end of the year. I had regular Fed and CA taxes withdrawn from my pension with maximum withholding. Since my taxes were nearly identical 2023 to 2024, I trusted the estimated tax payment calculations that TT made. I made the estimated tax payments on time.

I'm not sure why TT so grossly underestimated my quarterly payments for my CA and why I have such a large Fed refund. Doesn't TT guarantee that their calcs are accurate? How do I access that guarentee if a calc isn't correct?

[VolvoGirl]

They were just estimates and optional to pay.  I always go into the program to update my income to adjust the estimates each quarter.  I don’t trust the automatic estimates Turbo Tax provides.  I have the Desktop program and also use the What-If worksheet.  

Did you enter the payments into your tax return?  

[ADB4]

Yes, I entered all the estimated plus withheld amounts into our desktop Premier 2024 version. We also use the 2023 what-if worksheet and I actually decreased the Roth conversion for 2024 compared to 2023 so that the totals would be similar. Dividends were a little higher in 2024 necessitating a reduction in the Roth conversion to make income approx equal, in each category, as the previous year (2023). We used the what-if worksheet for this. My mistake is that I should not have trusted that TT will calculate estimated taxes correctly, even when the tax situation is nearly identical. From now on, I certainly will use 110% and add significantly extra to each CA estimated payment. I'd rather have a refund to apply to next year's than a penalty.

I guess I feel like some of my trust is reduced in TT.

[kmd]

I had the same thing happen!!  My CA 540-ES quarterly estimates from TurboTax for 2024 were grossly under for California such that I ended up with a $110 penalty.  I'm going to ask CA for a waiver.  But this is super annoying and clearly a bug in TurboTax.  I am using TurboTax Premier 2024.

[ADB4]

I also asked CA for a waiver. Since my income is from retirement accounts and is not the same in each quarter, I was able to document that a greater amount of my income was in the last quarter. Subsequently my penalty was reduced. Going forward, I will use 110% for estimated payments.

[kmd]

Yes, I am also retired and am in the same situation.  However, my spouse is working, so it's a combination of me paying 540-ES estimates and an employer CA state tax deduction.  I just found this online:

"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."

So, yes, to be safe from penalties due to unexpected income increases, it has to be 110%.  Unfortunately, it seems TurboTax defaults to 90% when calculating estimates for the next year when it should be 110%.  As I move through the step-by-step, I'm not even getting prompted for this.  I only see the default to 90% when I go into the forms.  TurboTax should correct this and default to 110%.

Thanks for your post and input on this.