estimated tax payment or not

[Helen123]

Hi 

I moved to US last year. I was NRA and from this year, I am RA.

1. I just receive salary and bonus from my employer.  The only extra income I have is interests from my banks and some CDs (I assume this is bank interests as well if it is not, please correct me). Do I need to do estimate tax payment or not?

2. I remember it says if the tax payment of this year is higher than last year, even if you owe some tax, you can just pay it back in 2024. May I ask it means the tax paid in US or total tax you paid to the different country? I was in UK and moved to the US in the midddle of the 2022. Therefore, the total tax payment to the US of 2023 will be 100% higher than 2022 for the US. The tax year of UK and US are totally different. If the tax payment means the total tax payment to the different country, it will be very complicated. 

3. I will use turbo tax to calculate my 2023 tax. My 2022 tax is done by the accountant because turbo tax cannot do NRA tax.   When I use turbo tax to fill in my info, do I need to pay any attention?  I think turbo tax may need me to provide my info for 2022 as well?

Thanks,

Helen

[Anonymous_]

@pk?

[pk · Accepted solution]

@Helen123 ,  

1. The requirement that you must be substantially current with your tax payments ( i.e. both the Federal and State tax liabilities  through withholdings be enough to approx. meet the liabilities ) is generally computed quarterly and estimated payments are required  else  an interest charge is  imposed.  Assuming  that your W-4 ( that you supplied to your employer) is correct, you should  be sufficiently withheld.

2. The non-employment based incomes ( interest / dividends  and other passive incomes and expected taxes thereon is often not allowed for on  form  W-4 and therefore , and if such incomes are substantial, it  is  advisable to either  (a) make estimated payments quarterly or in the particular/ influencing quarter  OR (b)  file  the tax return by 01/31/XX -- XX being filing season.  You can always use  TurboTax  for the year to estimate tax liability or use the IRS   withholding calculator to see if you need to make an estimated payment.  Usually where one gets in trouble is  at the State level because the States tend to less forgiving and always trying  the last bit of income tax they can get.

3. If in doubt, then please consider making an estimated payment to both the federal and State -- if un-needed ( i.e. if the withholdings are sufficient ) then it comes back as refund.  AS you have probably  seen by now  the US " voluntary" tax payment system puts the onus on the taxpayer  ( and penalized if the responsibility is not met ) as opposed to the UK ( and many other countries ) where the  PAYE / Taxed at Source  or similar , puts the onus on the collector or the payor not the payee.

Thus  , and assuming a correct W-4,  your wages and Bonus payments  and tax withholdings thereon should be sufficient to meet your obligations.  Furthermore , the tax on your passive income ( which you should check anyhow ) is unlike to result in federal liabilities of more than US$1000 ( the trigger point for  interest and penalty charges).

Obviously this is my opinion ( and I am in the dark about the quantum of incomes we are talking about ).

 Is this connected to your earlier queries about transferring of monies  between spouses ands countries ?

Is there more I can do for you ?

pk

[Helen123]

1. I saved half year CD with some money. However, it will be expired next year. I do not know how much interests I will receive this year. How can I estimate the tax?

2.  I assume there is no rule that if the tax you paid next year is high than this year, you will not get penalty if you pay less tax (a little moroe than 1000, for example), right?

3. I assume when I fill in my 2023 tax return, I do not need to fill in the info of my 2022 NRA?

Thanks

Helen

[pk]

@Helen123  

Many CDs  ( fixed deposits  type ) do not pay anything till  term is up ( unless you close early ).  But either way  you will get APR ( annual percentage rate called out in your contract  ) for the year  multiplied the  term expressed in years.  Thus you should have a good idea  of your interest earnings for the calendar year.   Please talk to your bank and find out if and when they will issue a 1099-INT.   

I would  also ( very ) strongly recommend  that you  take a look at your withholding ( for the fed at least )  using your Nov. end of the moth paystub and the IRS  Withholding Calculator --- this will show you how much you may  or may not owe in Federal taxes at that point in time.

Is there more I can do for you  --- BTW, if it not of general interest, you are welcome to PM  

pk

[Helen123]

thanks