Estimated Taxes for 2024

[freddytax]

Do I need to file my 2024 estimated taxes first quarterly installment on Apr. 15, 2024 along with my 2023 taxes or is my first estimated 2024 payment due on June 17?

Thank you!!

[DianeW777]

The first estimated tax payment is due April 15, 2024, and the second installment is June 17, 2024.  You can send the first installment a little late, although I would not recommend waiting until June.  The IRS system is pay as you go, so you could have interest and penalty for late payment next year if you decide to pay them late.  A few days or a week would not add an extreme amount.

• Estimated Tax Due Dates

[freddytax]

Thank you, Diane!!

[Mike9241]

you may be able to avoid having to pay estimates by increasing your withholding for 2024, if possible.

to avoid penalties for not prepaying enough taxes on a timely basis. here are the basic rules.

if you elect not to pay estimates then to avoid penalties your 2024 withholding must equal the lesser of these 2 amounts.

1) 90% of your 2024  federal tax

2) 100% of your 2023 federal tax ( it's 110% if your 2023 Adjusted Gross Income is $150,000 or more)

[freddytax]

Thank you, Mike!  I'll provide some important context.  I retired last year so I no longer have a W2 with withholding but rather income derived from interest, dividends and capital gains (nothing withheld).  Any advice is greatly appreciated!

[JohnB5677]

You may be able to project the interest and dividend amounts, but it will be difficult to guess the investment gain or loss.

To be confident that you won't owe a penalty, I suggest:

Paying 100% of your 2023 federal tax ( it's 110% if your 2023 Adjusted Gross Income is $150,000 (Line 10 of your 1040) or more)

The Total Tax  can be found on line 24 of your tax return (Form 1040).

You can take this amount and divide by 4 and make 4 equal payments..

TurboTax will guide you through the mailing process for your 1040-ES estimated payments.

You can setup an account and pay directly to the IRS Direct Pay With Bank Account

Please contact us again with any additional questions.

[freddytax]

Thank you for the response.  So I do plan on paying 100% of my 2023 tax liability before Apr. 15.  Does that allow me to avoid making quarterly estimated tax payments for tax year 2024?

[DawnC]

You are not required to make estimated payments; the reason you opt to make estimated payments is to avoid possible penalties.   The payment of your 2023 tax liability will not count as an estimated 2024 tax payment; it is a 2023 tax payment.   If you meant you will be making an estimated tax payment in the amount of your 2023 tax liability, then yes, you won't incur a penalty in 2024 and do not need to make any more payments. 

To avoid penalties, your 2024 estimated payment(s), since you will have no withholding, must equal the lesser of:

#1-  90% of your 2024 Federal tax - which should be much lower compared to #2.   

#2 - 100% of your 2023 federal tax ( it's 110% if your 2023 Adjusted Gross Income is $150,000 or more)

You can use TurboTax to estimate your tax liability and generate vouchers if you think you will need them.

•  With your tax return open, search for 1040-es (be sure to include the dash) and select the Jump to link.
• Answer No to the question Do you want to change your W-4 withholdings for 2024?
• Answer the questions about things like your 2024 filing status, income (capital gains), and deductions.  
• Eventually, you'll come to the Print Vouchers? screen.  Answer Yes, and we'll include your 2024 1040-ES payment vouchers when you print a copy of your return later.

[freddytax]

Thank you!  If I pay 90% by Jan. 15, 2025 when is the other 10% due?

[VolvoGirl · Accepted solution]

I don't think you fully  understand.  You still need to pay the current tax due for 2023 by April 15, 2024 next month. 

Then for the 2024 return that you file next year in 2025 you need to pay in at least 90% of your 2023 tax liability on 1040 line 24 by withholding or estimates.  The four 1040ES quarterly estimates are due
April 15, 2024
June 17, 2024
Sept 16, 2024
Jan 15, 2025

So in April you need to pay the 2023 tax due and the 1st quarter 2024 estimated payment.

There is no other "10%".  The 90% is just to avoid any penalty on next year's return.  Then when you file 2024 return in 2025 you will either have a tax due or a refund.  The 2024 return and tax due are due on April 15, 2025.

If your income goes down in 2024 you may get a refund for some of the estimates you paid in.  Will you be getting any retirement income or Social Security?  

Hope this helps.  Hope I didn't confuse you more.  

[freddytax]

Thanks, VolvoGirl!  I do understand and my 2023 taxes are all ready to be filed.  I'll add some more context.  2023 contains quite a bit of income due to a) my final W2 (I retired), b) a home sale and c) large other capital gains due to stock sales.

So my challenge has been to estimate 2024 income as it will be approximately 1/3 of 2023.  And I believe that I have that estimate pretty close now.  Back when I was employed my federal withholding was never enough and I always owed taxes but never had to pay a penalty.  Do you think there would be a penalty if I paid, say, 75%?  I have the amount owed as $16,000.

Thanks!!!

[JohnB5677]

I can't answer if 75% is too much, or too little.

• You indicated that your income will be 1/3 of your 2023's.
• If that is the case it will be more than enough.
• TurboTax does have a tax estimator.
  • You can evaluate multiple scenarios.
  • You can also make changes to adjust during the year if you get a grater increase in income.
• @VolvoGirl has given the dates the estimated payments are due.

TurboTax will guide you through the mailing process for your 1040-ES estimated payments.

Or you can setup an account and pay directly to the IRS Direct Pay With Bank Account

Please contact us again with any additional questions or to provide some additional details.

[freddytax]

Thanks!  I think I may have overthought this and answered my own question.  I rejiggered some numbers and came up with an estimated tax of $17,442 for 2024.  If I leave that money in the bank earning 5% interest I make $872.  The penalty would be roughly .04635 = $808.  Pretty presumptuous (and funny) that the government thinks that their money makes ~4.6%!!  So I'll just pay them the entire tax on Apr. 15, 2025 and save myself the ridiculous hassle of quarterly payments.

Cheers